With buy now pay later, you can buy the item of your choice without making an upfront payment. It’s an excellent option for those who don’t have the cash on hand or want more control over their finances. However, some risks and rewards come with this type of financing. This blog post will explore what buy now pay later is, how it works, and some important news about these programs and how they will impact your credit score in 2022.
What is buy now pay later, and how does it work?
Buy now pay later means that you buy something in the present, but then you don’t have to pay for it until much later. For example, you want to buy a pair of custom Jordans or NIKES, but maybe you don’t get paid until Friday, or you want to test out the shoes and make sure they fit well and look fresh. Well, buy now pay later will make this possible and help you get your hands on those new kicks.
The benefits of buy now pay later.
Buy now pay later is an excellent option for those who don’t have the cash on hand or who want more control over their current finances on hand. As some say, cash is king. And buy now pay later gives you the ability to buy what you want and still have time to think about it before paying for it.
The risks of buy now pay later.
Buy now pay later is a risky move if you end up not being able to keep up with the payments when they are due. If you buy something too expensive and can’t afford the payments, it could lead to debt.
Another risk of buy now pay later is that your credit score might take a hit if you don’t make timely payments. This could be because buy now pay later is seen as a high-risk loan by some lenders, as you’ll see below.
Buy now, pay later in 2022, and how it will impact your credit score.
It’s a new year, and buy now pay later programs will have even more of an impact on your credit score. This means that if you’re thinking about using buy now pay later, you should do so sooner rather than later. The longer you wait, the more your credit score might be impacted as the changes kick in.
Lenders are starting to see buy now pay later as a high-risk loan, which is why some lenders are looking at ways to make it even harder for people to use these programs. This might also help to explain why these loans will start showing up on your credit report. So any late payments or defaults on these loans will be included in your credit history. This could make it harder for you to buy something in the future when you need credit, such as a car or home.
There is also some chit-chat, nothing official, about buy now pay later no longer being an option for people with really low credit scores. This means that if your score falls below a certain level, then buy now pay later might not be possible anymore.
Should you utilize the buy now pay later option when you see it? It all comes down to you and your financial situation. If you think that buy now pay later is suitable for you, or if you’ve already been doing it, you will most likely continue to do it. But I personally would just pay for it on the spot, then return it if you don’t like it or whatever. That said, make sure that you understand the risks and rewards associated with these programs. Especially with this credit score news!
Watch the video down below for more information about these changes and how your credit score might be impacted. Check out the New York Times source here, and more blog posts here.
