Klarna will start telling credit agencies whether customers pay on time or miss payments it has been announced.
The buy-now-pay-later firm that offers customers the ability to pay for purchases in instalments or at a later date has said that from the 1st of June, Klarna repayment habits will appear on a person’s credit report.
The move comes amid pressure from debt advocates and campaigners who argue that consumers should be deterred from taking on more debt than they can afford.
Under this move, some argue that regular borrowers who use Klarna and do not pay back the money they owe on time will have their credit scores negatively impacted and that this will put some people off however Klarna argue that this is not the case.
Head of Klarna UK Alex Marsh told The Guardian, “It is alarming that UK consumers are still being forced to take out high-cost credit cards to demonstrate they can use credit responsibly and build their credit profile. That will start to change on 1 June this year as the vast majority of the 16 million UK consumers who make Klarna BNPL payments in full and on time will be able to demonstrate their responsible use of credit to other lenders.”
The buy-now-pay-later firm also added, “Consumers who make payments on time can build a positive credit history, showing lenders they use credit responsibly.”