In today's age of virtual storefronts and one-click wonders, there are infinite options that promise you the world on a digital platter. One such option is ‘Buy Now Pay Later’, which offers seamless convenience in the online shopping scene. Let’s take a closer look at this convenience and its potential influence on your Cibil Score. 


What is BNPL?


Imagine you’re shopping for a cool new gadget, like a mobile phone, but you’re a bit short on cash at the moment. Suddenly you see the option to get it right away without paying upfront. Sounds like a dream, right? That’s exactly what BNPL or Buy Now Pay Later is all about. BNPL services have become very popular because they’re quick and easy. You get what you want, and then you pay back in smaller chunks later.


Your CIBIL Score


Now, let’s talk about your CIBIL Score. Think of it as a financial report card that proves how well you’ve managed your financial responsibilities. When you want to borrow money for big ticket purchases, such as a car or a house, lenders look at this score to decide if you’re a reliable borrower. This 3-digit number between 300 and 900 also decides your eligibility for many financial opportunities. The higher your score – think 750 or more – the more trustworthy you appear to lenders, meaning they are more likely to approve your application for credit and give you favourable interest rates and terms.


BNPL And Your CIBIL Score


Arriving at the heart of the matter, let’s answer the big question: will BNPL affect your CIBIL Score? Well, BNPL itself doesn’t directly affect your CIBIL Score. But here’s the catch: if you don’t keep up your end of the bargain and miss your BNPL payments, you might find your financial reputation taking a hit.


Your repayment history contributes most significantly to the calculation of your credit score, having a whopping 35% weightage. While you can easily get BNPL approvals, failure to make the payments hurt your credit score just like if you were to miss your loan EMIs or credit card bills. These defaults, if reported to credit bureaus like TransUnion CIBIL, might cause damage to your CIBIL Score.


There are BNPL services that don’t report to credit bureaus, in which case your CIBIL Score will remain unaffected by your missed payments. However, it’s important to note that such BNPL services might charge a late fee for delayed payments, and if this recurs, then the costs might add up over time.


Using BNPL Wisely To Protect Your Credit Score


If you’re wondering if you can still safely use BNPL without negatively influencing your credit score, the answer is yes! Just remember a few tricks to keep the balance:



  • Keep an eye on the clock: Make sure you remember when your BNPL payments are due. Set reminders, if you have to, so you don’t miss the payments.

  • Don’t go crazy: Use BNPL for things you really need, not for everything that catches your eye.

  • Choose your BNPL service wisely: Check whether they report to credit bureaus and what fees, if any, they levy on late payments.


BNPL – like every financial service – is a tool that must be used wisely and responsibly. Pay your dues on time, don’t go overboard, and your CIBIL Score will have not a scratch on it. Remember to review your credit score regularly to ensure that it’s in good shape. While you can easily avail of your free credit report once a month from leading credit bureaus, including TransUnion CIBIL, a service like Bajaj Finserv Credit Pass can help you monitor your credit health report and CIBIL Score on a regular basis. Sign up today for real-time updates to your credit health report and monthly CIBIL Score checks so you're always in the loop about your credit status, and can proactively take measures to manage and improve your financial well-being.


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