Which? updates BNPL comparison table on Clearpay credit scores

Which? updated its comparison table of buy now pay later (BNPL) schemes on 2 February 2022 to state that Clearpay users' credit scores will not be impacted if they miss a repayment¹. The change appears in a Which? article on Amazon and Barclays' BNPL scheme, published on 26 January 2022, which compares the credit checks and missed payment consequences of several providers¹.

The table sets out how each scheme treats a missed repayment. For Amazon's Instalments by Barclays, Barclays says a credit score may be impacted, and no late fees are charged. Clearpay is listed as not impacting credit scores but charging late fees. Klarna's "Pay in 3" and "Pay in 30" are listed as neither impacting credit scores nor charging late fees. Laybuy is listed as impacting credit scores and charging late fees. OpenPay is listed as not impacting credit scores but charging late fees. PayPal says credit records may be affected, with no late fees for agreements made after 30 September 2021. Zilch says it may provide details of late payments to credit reference agencies, which could affect a credit rating, and charges no late fees¹.

The same article describes the credit checks each provider carries out. Amazon's Instalments by Barclays involves a hard credit check, as does Laybuy, while OpenPay uses a hard check for the first transaction followed by soft checks. Klarna's "Pay in 3" and "Pay in 30", PayPal and Zilch use soft checks. Clearpay is listed as carrying out no affordability checks, with a low limit that increases if repayments are made¹.

On Amazon's scheme, Barclays told Which? the headline APR is 10.9% for online purchases, although promotional rates and interest-free financing may be available at times. The scheme launched in December 2021, splits orders over £100 into monthly instalments lasting between 3 and 48 months, and is regulated by the Financial Conduct Authority. Barclays says that if a repayment is missed and the customer does not get in touch, additional interest may accrue and a credit score may be impacted, and that in extreme cases a customer might be referred to a debt collection agency¹.

Why it matters for households

The update concerns what appears on a credit file when a Clearpay repayment is missed. A missed payment recorded on a credit file can be seen by lenders assessing applications for credit, which is why the distinction between schemes matters to anyone using more than one provider. The table draws a line between providers that say a credit score may be affected, such as Amazon's Instalments by Barclays, Laybuy and PayPal, and those listed as not affecting it, such as Clearpay, Klarna's "Pay in 3" and "Pay in 30", OpenPay and Zilch¹. Late fees are a separate matter: Clearpay, Laybuy and OpenPay are listed as charging them, while Amazon's Instalments by Barclays, Klarna, PayPal and Zilch are not¹.

The credit check performed at sign-up also differs. A hard check, as used by Amazon's Instalments by Barclays and Laybuy, is visible to other lenders; soft checks, used by Klarna, PayPal and Zilch, are not shown on a credit report or do not impact a credit score, according to the article¹. Clearpay is listed as carrying out no affordability checks¹.

What happens next

No further changes to the table have been reported beyond the 2 February 2022 update¹.