TROY — Buy now, pay later options are where you buy something now and pay for it over time. Now, it could impact your credit score.
News Center 7’s Xavier Hershovitz talked with a Miami County financial planner about the impact this option could have on people.
Rob Burnette, CEO and Financial Planner for Outlook Financial Center, said, “Like all tools, they can be used, you know, appropriately and provide great benefit. But if all you have is a hammer, everything’s going to look like a nail. It’s not going to pan out well.”
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Burnette said Buy Now, Pay Later options, like Affirm or Afterpay, can come in handy if used correctly.
“If your cash flow permits it, you’re using somebody else’s money interest-free for a short period of time. That’s really not a bad thing. But as you just alluded to, you get four or five of these things and all of a sudden, you’re underwater again,” Burnette said.
The option could start to impact your credit score. Credit bureaus will not start factoring in Buy Now, Pay Later sources, and if people are paying them on time.
“It’s not a big piece; it’s only like 1`0% of your score. So, it’s not fatal, but it’s there. The real concern is - if you buy now, can you pay later?” Burnette said.
Late payments already come with hefty penalties. And now it would impact your credit score. Burnette said it’s important to make sure you budget for these recurring payments before signing up for them.
He continued by saying the best way to build your credit is to pay things on time, so this could really help. But he cautions people with credit issues – be careful and not fall into old habits.
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