Laybuy will now share your buy now, pay later borrowing history with Experian – here's what it means for you
From 1 September, shoppers using Laybuy's buy now, pay later (BNPL) services will have their repayment data shared with the UK's biggest credit reference agency, Experian.
The move is good for those who use Laybuy's payment plans responsibly, as payments made on time will help establish a positive credit history. But it also means that if you miss a payment, or pay late, you could be less likely to be accepted for credit in future.
This is important as if you've a lot of BNPL debt, or you're struggling to repay each month, other lenders will be able to make a better, more informed decision about whether they are willing to lend to you compared with now, when they may not know you used BNPL.
The Government has already proposed new rules for the largely unregulated BNPL sector but Laybuy's decision to share its data with Experian comes ahead of any regulation being put into law. It joins Klarna, which announced in June that it would share customer data with Experian and TransUnion.
For more information on how BNPL works in general, see our Buy Now, Pay Later guide.
Laybuy will share your payment data with Experian from 1 September
From tomorrow (1 September), Laybuy will pass on any BNPL payment data for new and existing customers to Experian.
Any payments made before 1 September, whether late or on time, will not be reported to the credit reference agency. If you're in the middle of a repayment plan - for example, you've begun making repayments for a product and still have a few more to make - Laybuy will only pass on information about payments due after 1 September.
Laybuy will report:
- Payment performance, including amounts owed and payment status. This could benefit your credit file and improve your chances of getting accepted for a loan, mortgage or credit card in the future.
- Missed AND late payment information. This could really damage your credit file and would be seen as an immediate red flag by other lenders.
Repayment data from Laybuy won't affect your credit score - for now
Laybuy says that its reporting of data won't feed through to credit scores yet as Experian is still working on integrating this data into its system. But it is expected that at some point, data from Laybuy will impact credit scores - we don't know when this will be though.
Yet, your credit score from a credit reference agency is only a rough indication of how well, or badly, you manage credit. All Laybuy payment data will be visible to other lenders through credit files, and it's this - not your credit score - which impacts how likely you are to be accepted for other credit, as each lender has its own score card.
Traditional forms of credit still offer better protection than buy now, pay later
BNPL is a form of credit, so it makes sense to consider whether BNPL or a more traditional form of credit, such as a 0% credit card or 0% overdraft, is better for you. Check out our Best 0% Credit Cards guide and our Top Current Accounts if you're overdrawn for a full break down.
If you choose to borrow through unregulated BNPL firms you'll be forfeiting any Section 75 Protection and a right to complain to the Financial Ombudsman. You'll also have a much shorter repayment window than if you were to borrow through a credit card or overdraft.