Does Revolut Pay Later affect credit score?

Does Revolut Pay Later Affect Your Credit Score? The Unseen Impact of Buy Now, Pay Later

Buy Now, Pay Later (BNPL) services offer tempting convenience, allowing you to spread the cost of purchases over several installments. Revolut Pay Later is a popular example, offering a seemingly seamless way to manage expenses. But lurking beneath the surface of this convenient payment method is a question many users grapple with: does using Revolut Pay Later affect my credit score?

The short answer is: it can, but not directly in the same way a traditional credit card would. Revolut doesn’t currently report your Pay Later activity to the major credit bureaus (like Experian, Equifax, and TransUnion) in the UK or the US. This means missed payments won’t appear as a negative mark on your credit report. However, this doesn’t equate to a lack of consequence.

The indirect impact is where the potential for harm lies. While your credit score won’t be directly penalized for late Revolut Pay Later payments, consistent late or missed payments can trigger several negative repercussions:

• Debt Collection Agencies: Persistent failure to repay your Revolut Pay Later installments will likely lead Revolut to pursue debt collection. This action can, in turn, be reported to credit bureaus, severely damaging your credit score. Debt collection activity is a major red flag for lenders.

• Impact on Future Credit Applications: Even without direct reporting, lenders often assess your overall financial responsibility. If you struggle to manage your Revolut Pay Later payments, it suggests a potential lack of financial discipline. This can influence their decision when you apply for a loan, mortgage, or even a new credit card. Lenders may view your consistent reliance on BNPL services as a sign of over-indebtedness.

• Internal Revolut Scoring: While not impacting external credit scores, Revolut likely maintains internal records of your repayment behaviour. This information could affect your eligibility for future Revolut services, including higher credit limits on Pay Later or access to other financial products offered by the platform.

Responsible Use is Key:

To avoid the negative consequences of using Revolut Pay Later, responsible usage is paramount. This includes:

• Only borrowing what you can afford to repay: Before using Pay Later, carefully assess your budget and ensure you can comfortably meet all installment payments on time.
• Setting up reminders: Avoid late payments by setting reminders for each payment due date.
• Paying on time, every time: Punctual payments demonstrate responsible financial behaviour, even if it doesn’t directly impact your credit score.
• Understanding the terms and conditions: Thoroughly read and understand the terms and conditions of Revolut Pay Later, including fees and charges for late payments.

In conclusion, while Revolut Pay Later doesn’t directly report to credit bureaus, irresponsible use can indirectly damage your creditworthiness. Consistent timely repayments are crucial for maintaining a positive financial reputation and ensuring access to future financial opportunities. Treat Revolut Pay Later with the same level of care and responsibility you would any other form of credit.