For business purposes only.
Key Takeaways
- Yes, Payl8r does check the customers credit, however this is only a soft credit check which doesn’t impact their credit file and is only visible to them.
- Affordability checks are also part of the process which are done using Open Banking technology.
- Payl8r is a regulated lender under the Financial Conduct Authority (FCA). This ensures responsible and ethical lending.
- BNPL can both improve and harm the customers credit score, just like any other type of borrowing, it depends on how they manage their repayments.
Buy Now Pay Later (BNPL) services are increasingly popular, but many people are still unclear about how they work, especially when it comes to credit checks and the impact on their credit score. In this post were going to bust some of the myths around BNPL and answer some of the myths around BNPL and answer the most common question we see:
“Does Payl8r check credit score”
Does Payl8r Check Credit Score?
The answer is yes, but this is only a soft credit check.
When a finance application is completed by a customer, Payl8r will automatically perform a soft credit check and affordability assessment to assess whether the finance option is suitable.
Here’s how it works:
- Soft Search – When a customer applies for finance, we will run a soft credit search which lets us assess whether the customer is able to afford their monthly repayments. These soft searches are invisible to other lenders and only visible to the customer.
- Affordability checks – Our Payl8r tech will score their affordability automatically. If we feel we need more from them, we may ask them to connect Payl8r to their bank account for an affordability assessment using open banking.
Why Does Payl8r Use Credit Checks?
Payl8r is a regulated finance provider, authorised by the Financial Conduct Authority (FCA). This means we must lend responsively by ensuring every customer can afford their repayments.
By checking credit scores and performing affordability checks, this helps us:
- Offer fair, transparent finance
- Reduces the risk of borrowing becoming unaffordable
- Protects both customers and businesses
We never want finance to become a burden. That’s why we carry out checks to make sure it’s affordable and fair, it’s part of our promise to lend responsibly and meet FCA standards.
‘Firms are responsible for making sure customers are treated fairly.’
Financial Conduct Authority
Is BNPL Bad for Credit Scores?
BNPL affects the customers credit score in the same way as other borrowing, it depends on their behaviour. Using it responsibly by making payments on time can be beneficial, while missing payments may negatively impact their score.
Payl8r has a dedicated team that are available for customers to contact at any time whether they are struggling with repayments, or if they just need someone to talk to about their financial situation. Customers can also find more information on our repayment support page which has useful resources and contact details to get in touch with our team to discuss anything regarding their repayments.
BNPL can help build a Credit score:
When repayments are made on time, finance agreements may appear on a customer credit file as a positive mark, helping to strengthen their credit history.
BNPL can harm a Credit score:
Just like any other form of borrowing, missing payments, defaulting or overextending credit can lead to negative reports on the customers file.
Why Our Approach Matters
At Payl8r, we’re committed to helping customers, not misleading them. That’s why we never hide fees or bury important information in the small print. Every part of our approach is designed to promote fair, transparent, and responsible lending, delivering real value to both businesses and their customers.
Want to Learn More?
Are you looking to offer your customers ways of spreading the cost? If so you can complete our business enquiry form here.
FAQs
What is Open Banking?
Open Banking allows you to securely and safely share specific financial information with third party providers of your choice, for example your account balance and transaction history. It’s designed to give you greater control over your data and how it’s used, making it easier to access tailored financial products and services.
What is a soft credit check?
A soft credit check is a quick look at a customers credit history to see how well they manage borrowing. However, this is only visible to them and no other lenders. It also doesn’t impact their credit score.
Is BNPL bad for credit scores?
BNPL isn’t bad for a customers credit score, it only affects their score if they fail to make repayments on time or their account goes into arrears. If they keep up to date with their payments, it will positively impact their credit file.
Can I use Payl8r if I have a low credit score?
Yes, Payl8r considers more than just the customers credit score. We take into account overall affordability and financial history to make a fair decision. However, approval is never guaranteed and is subject to our full loan evaluation process.