As the popularity of buy-now-pay-later (BNPL) services continues to grow, many consumers are left wondering about the impact of using these services on their credit scores. Klarna, one of the leading BNPL providers, is no exception.
In this article, we will talk about does Klarna affect my credit score and explore whether using their services can affect your credit score.
What is Klarna?
Klarna is a Swedish fintech company that offers a range of payment solutions, including BNPL services. Their platform allows consumers to delay payment for purchases, often with interest-free or low-interest options.
With Klarna, you can split your payments into multiple installments, making it easier to manage your finances and avoid overspending.
Does Klarna Perform a Credit Check?
Klarna does perform a soft credit check when you sign up for their services. This is usually done to verify your identity and assess your creditworthiness. However, Klarna claims that this soft credit check does not affect your credit score.
In most cases, a soft credit check will not appear on your credit report, and your credit score will remain unaffected.
Types of Credit Checks Performed by Klarna
Klarna performs different types of credit checks depending on the payment method or service you choose. Here are some examples:
- Soft Credit Check: Klarna performs a soft credit check when you sign up for their services, which is usually done to verify your identity and assess your creditworthiness. This type of check does not affect your credit score.
- Hard Credit Check: In some cases, Klarna may perform a hard credit check, which can affect your credit score. This is usually done when you apply for a credit product or service that requires a higher level of creditworthiness.
How Klarna Affects Your Credit Score
Klarna’s impact on your credit score is minimal, and in most cases, it will not affect your credit score at all. Here are some reasons why:
- As mentioned earlier, Klarna’s soft credit check does not affect your credit score.
- Klarna reports your payment history to credit bureaus, which can positively impact your credit score if you make timely payments.
- Klarna’s payment plans can help you maintain a healthy credit utilization ratio, which is an important factor in determining your credit score.
Benefits of Using Klarna
Using Klarna can have several benefits for your credit score:
- By splitting your payments into multiple installments, you can maintain a healthy credit utilization ratio, which can positively impact your credit score.
- Making timely payments with Klarna can help you establish a positive payment history, which can also positively impact your credit score.
- Using Klarna can help you diversify your credit mix, which can also positively impact your credit score.
Conclusion
In conclusion, Klarna’s impact on your credit score is minimal, and in most cases, it will not affect your credit score at all. Klarna’s soft credit check does not affect your credit score, and their payment plans can help you maintain a healthy credit utilization ratio and establish a positive payment history.
Some Questions
Does Klarna perform a credit check?
Yes, Klarna may perform a soft credit check when you apply for their payment options. However, the type of credit check depends on the payment method or service you choose.
Does Klarna affect my credit score?
Klarna may affect your credit score in two stages: first, when you make an application, and later when you’re paying them back. However, Klarna claims that their soft credit check does not affect your credit score.
What is a soft credit check?
A soft credit check is a type of credit inquiry that does not affect your credit score. It is used to verify your identity and creditworthiness.
What is a hard credit check?
A hard credit check is a type of credit inquiry that can affect your credit score. It is used to verify your creditworthiness and is typically performed when you apply for a loan or credit card.
How does Klarna’s financing option affect my credit score?
Klarna’s financing option is similar to buying with a credit card, and interest is payable at an annual percentage interest rate of no more than 21.90%. This may affect your credit score if you’re late making payments or have a high credit utilization ratio.
