Buy now, regret later? The tricky relationship between BNPL and credit ratings
- As BNPL use has surged through the pandemic, consumers’ credit scores have taken a significant hit.
- Research shows more than a third of BNPL users have fallen behind on their payments and hurt their credit score.

Buy Now, Pay Later has grown massively over the last couple of years. Aside from its ease of use and flexible payment terms, BNPL’s popularity surged due to the sustained growth in e-commerce through the pandemic. Store closures and stay-at-home orders compelled people to shop online, which many did out of necessity and others did to cope with stress.
In 2019, Americans spent $20 billion on retail purchases using BNPL programs. This number increased to $24 billion in 2020, and is on track to reach $100 billion this year. All this growth has made BNPL a hot commodity across a variety of industries. Whether it’s banking and fintech heavyweights like Goldman Sachs, Visa, Mastercard, Square and PayPal, or tech and retail giants like Apple, Amazon, Shopify, Walmart, Ikea and Macy’s, everyone wants in.
Meanwhile, the economic uncertainty brought by the pandemic has dented the popularity of credit cardsin the U.S., especially among younger consumers who are wary of the downsides of excessive credit card use, such as overspending, impulsive purchases, and mounting debt. These consumers are readily switching over to BNPL, which has marketed itself as a viable, zero-interest alternative.
Yet, recent research suggests that BNPL users may be falling into the same traps that they were hoping to escape by abandoning their credit cards. More than a third of BNPL users (34%) have reportedly fallen behind on one or more payments, according to a study published by Credit Karma. Furthermore, almost three-fourths (72%) of these consumers believe their credit score has declined as a result of missing the payments.
But why are so many BNPL users falling behind on their payments?
“BNPL has made it easier than ever to purchase an item, without even thinking about the implications of the purchase. It’s this disconnect between making a purchase and actually paying for it where consumers can get in trouble,” explained Colleen McCreary, chief people officer and financial advocate at Credit Karma. “For some, it’s even a matter of forgetting to make the payment on time, rather than not having the funds.”
This content is available exclusively to Tearsheet Outlier members.
Missing out? Subscribe today and you’ll receive unlimited access to all Tearsheet content, original research, exclusive webinars and events, member-only newsletters from Tearsheet editors and reporters and much more. Join Outlier now — only $49/mo. Already an Outlier member? Sign in to your account