ATLANTA — Certain applications, like Afterpay and Affirm are becoming the new form of layaway for online and in-store shoppers. They're known as "Buy Now, Pay Later" apps and they offer a convenient way to shop when you can’t pay for a purchase all at once.
Viewers are asking if these third apps come with strings attached.
11Alive went to the experts to verify.
THE QUESTION
Do "Buy Now, Pay Later" apps, such as Afterpay and Affirm impact your credit?
OUR SOURCES
THE ANSWER
Depending on which BNPY app you use, they can come with some potential financial pitfalls or gains.
WHAT WE FOUND
This one needs context.
Financial Expert Ted Jenkins confirms that yes, some BNPL apps can impact your credit score depending on what platform you use and your commitment to paying your purchase off on time.
"When you make purchases through Buy Now, Pay Later, companies like Affirm or Afterpay, they can report a late payment. And then that could stick on your credit score for as much as up to seven years," Jenkins said.
Financial website Investopedia compared seven of the biggest BNPL apps and found that programs such as Affirm and Sezzle run a soft credit check but that it does not affect your credit score. On the other hand, BNPL app Klarna runs a soft check and will report missed payments, harming your credit.
Other popular apps like Afterpay don't check credit at all.
Jenkins recommends that people do try to save before they buy but said that some of these apps can help your credit in the long run.
“If you're disciplined enough to make those payments after you buy the product, number one, it can be cheaper. And number two, it can actually help you build credit if you're consistent and making those payments," said Jenkins.
Ultimately, some BNPL apps can impact your credit.
Just remember it's still important to pay on time and make sure to read the fine print to find out which app is the best for you.