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Apple’s BNPL Plan Will Show Up on Your Experian Credit Report. Here’s What That Means

It won’t affect your credit score -- for now.

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If you use an Apple Pay Later plan, that information is about to show up on your Experian credit report. Using the buy now, pay later service won’t affect credit scores for now, but could be factored into future scoring models.

Experian credit reports will include Apple Pay Later plans with a BNPL designation starting on March 1, the credit bureau announced Wednesday. Apple is the first major BNPL provider to fully share 4-1 installment loan data and payment history directly with a credit bureau. 

“By reporting Apple Pay Later loans to Experian, we aim to help promote greater transparency and responsible lending for both the borrower and the lender, while providing users with the opportunity to further build their credit,” Jennifer Bailey, Apple’s vice president of Apple Pay and Apple Wallet, said in the company’s press release.

If you’re looking to boost your credit by using BNPL services -- or you’re worried BNPL loans could hurt your score -- here’s what you need to know. 

How Apple Pay Later and other BNPL plans currently affect your credit score 

Generally, the best BNPL plans let you pay for a purchase in installments, often interest-free, which has made them an enticing alternative to credit cards for many consumers trying to avoid paying sky-high interest. Historically, short-term installment loans haven’t been reported to the three major credit bureaus

Your credit score is based on information from your credit report, including the following:

  • Payment history.
  • Amounts owed.
  • Length of credit history.
  • New credit.
  • Credit mix.

Lenders use your credit score to help decide whether you’re eligible for credit and the rate you’ll pay for it. Paying a balance down (or in full for revolving credit) can indicate you’re using credit responsibly, which can boost your score. But not paying balances or increasing debt can suggest you’re a risk -- which can hurt your score

Apple and Experian’s approach to “gently” integrating BNPL information onto a traditional credit report is a good approach, said John Ulzheimer, a credit expert who formerly worked for FICO and another credit bureau, Equifax. For now, the plans will only appear on your credit report and won’t be factored into your credit score. 

How BNPL plans could affect your credit score in the future

Depending on changing credit score models, Apple Pay Later and other BNPL services could be incorporated into credit scores down the road. But since credit models only change every few years, it could take time before BNPL plans are incorporated into your credit. 

“I feel it’s only a matter of time until this information is included in the credit histories compiled by other credit bureaus such as Equifax and TransUnion,” said Jason Steele, a credit expert and member of CNET Money’s Expert Review Board. “It’s also inevitable that BNPL data will be used in new versions of credit scoring formulas.”

But there are some risks.

“Anyone examining your credit history will see that you’re taking out loans to pay for consumer goods,” Steele said. “This may not be a bad thing, as long as you are making your payments on time.” 

And if BNPL plans do get factored in, there’s no indication how heavily Apple’s plan will weigh on your score. Since these are installment loans, they’ll likely be reported like a home or auto loan instead of revolving credit (like credit cards), Steele said.  

But the issue with BNPL still stands, Ulzheimer said. “Will someone who is constantly opening new BNPL loans ever be able to earn elite scores given the negative impact to the ‘age of credit’ metrics that are a part of all scoring systems?” 

It will certainly be harder, he added.

Tips to use BNPL plans responsibly

Apple’s partnership with Experian is only the start of companies reporting to credit bureaus. 

Experian cited in the press release that it has a history of working with BNPL providers and hopes to expand credit reporting on these plans. And how you use these short-term loans could affect your credit more. 

“Repayment will help their credit score and default will severely hurt it,” Steele said, adding you may want to use it less frequently if you find that it hurts your credit Alternatively, you can consider using a credit card for purchases to build your credit or a debit card if you prefer not to use a credit card.

Above all, the experts advise, use BNPL plans wisely. Consumers will need to treat BNPL loans just like any other auto or home loan, Steele said, making on-time payments every month. 

But as long as you pay your plan off in full and on time, a BNPL plan could potentially boost your credit score in the future.

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Dashia is a staff editor for CNET Money who covers all angles of personal finance, including credit cards and banking. From reviews to news coverage, she aims to help readers make more informed decisions about their money. Dashia was previously a staff writer at NextAdvisor, where she covered credit cards, taxes, banking B2B payments. She has also written about safety, home automation, technology and fintech.
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