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Does Klarna affect your credit score?

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Thinking of using Klarna for your next online purchase, but worried it might negatively impact your credit score? Let’s discover the dangers…


In your own mind, treating yourself to new things may be essential, but so is maintaining a good credit score, especially if you have long-term ambitions for loans and business. mortgages.

With Klarna, you can buy items from more than 200,000 online stores around the world that could cost a substantial amount of money without having to accumulate the funds first.

While using “buy now, pay later” services can be a great method of spreading out shopping expenses over a few weeks and months, there can also be downsides.

Since you’re technically borrowing money when using many online payment systems, it can impact your credit score. Maintaining your credit score is clearly vital, so understanding whether using Klarna for your next online purchase will impact your credit score is key.

Will using Klarna affect my credit score?

Although your credit score has not previously been affected by using Klarna, it may start to do so from June 1, 2022.

From June 1, 2022, Klarna will continue to report customers to credit bureaus if they use financing or skip payments, but it will also start sharing information with two major UK credit bureaus, Experian and TransUnion, about your transactions and your debts.

In its statement, Klarna said that for its “Pay in 30 days” and “Pay in 3” offers, information on “customer purchases paid on time, late payments and unpaid purchases” would be shared.

To determine your creditworthiness, credit card companies and lenders often use data collected by credit bureaus. The good news is that until the end of 2023, the change will not start to affect credit scores.

How will Klarna affect my credit score?

You should remember that, as with all kinds of financial loans, the fact that Klarna will now be reflected on your credit score doesn’t have to be a bad thing. If you borrow responsibly and stick to your part of the deal, Klarna could now have a positive impact on your credit score.

For example, using Klarna can boost your credit score if you borrow a small amount and make all your payments on time. This is because you will demonstrate to potential lenders that you have a habit of regularly repaying your debts.

However, failure to make timely payments may result in Klarna being reported to credit reference bureaus, which could hurt your credit score.

If you use Klarna and apply for financing or take a payment vacation, it could potentially hurt your credit score. These could affect your ability to get a mortgage or a new credit card.

It’s impossible to predict how using Klarna will affect your credit score because the method by which the company reports your debt and repayment information to the credit bureaus is new.

Why is my credit score important?

Your credit score is used by lenders, like Klarna, to assess your creditworthiness. Your credit score affects your eligibility for credit cards, loans, mortgages, and car loans, as well as the interest rate and terms that lenders may give you if you are accepted.

When you apply for a new policy, lease, or apartment, potential employers, landlords, and insurance companies can all check your credit report. In these situations, a high credit score can be a sign of your overall reliability and responsibility.

So before you commit to a £1000 ‘loan’ from Klarna, make sure you can afford the monthly repayments and make sure having that item right away is even worth the risk.

The benefits of using Klarna

For retailers, Klarna offers a number of benefits, such as selling more expensive items at a more affordable price. However, consumers also have many benefits, such as the following:

Flexibility

This is a really important question, despite the fact that it is obvious.

Your customers will be able to buy products they otherwise couldn’t afford in a single transaction if you provide them with a variety of payment choices as well as the ability to increase the cost.

This will result in an increase in your conversion rates as well as a reduction in the likelihood of transactions being canceled at the last minute.

No hidden fees

One of the many important benefits of using Klarna is that customers who choose Pay Later or Pay in 3 will not be subject to late penalties or interest charges.

When choosing from the many Klarna options available to you, it is essential to keep in mind that the Slice It payment option actually charges customers an interest rate.

Refunds are always available

If the customer changes their mind after receiving the items, they are free to return them and get a full refund. Klarna will refund the transaction and immediately stop any incoming payments after verifying that a customer has canceled or returned their purchase.

Customers will have a higher level of confidence when making a decision whether or not to make a purchase as a direct result of reduced risk.

Payment reminders

People are often discouraged from choosing deferred payment alternatives by the fact that they are not responsible for remembering due dates for each installment. Regular reminders will be sent to your consumers via Klarna in good time for each installment.

Financial aid

Klarna staff will help your customer find another form of reimbursement if they are unable to make payment on time for any reason.

While this won’t affect your business since Klarna will still pay you in full, you can rest easy knowing that the company supports its customers and helps them manage their money wisely.

Jake McEvoy

Jake is a lifelong professional writer, journalist, and tech enthusiast. It covers KnowYourMobile news and user guides.