BNPL on Very

[AelinGalathynius]

Is a 12 month BNPL agreement on Very really bad for your credit rating? Assuming it will be paid off before the deadline obviously. There’s something I could do with buying (not strictly essential but would make my life A LOT easier) but I’m on a reduced income until September. So the BNPL option is attractive. However, I need to buy a bigger car on finance (or with a loan) in September, and that really is essential. Would I really mess things up for myself by using BNPL? I could also use my credit card but it would take me over 50% of my limit, I have no idea if that would be better or worse than the BNPL for my credit rating. Any advice would be great! Thanks :)

Mine hasn't made my credit limit go down.

Don't go over your credit limit, that will mess up your credit rating.

Oh sorry - misread as going 50% over your limit!

It won't make any difference if you use BNPL or your credit card. They are essentially the same. You have the debt either way.

You would need credit for the Buy Now Pay Later agreement too. It might be cheaper than the credit card though, particularly if you have other debts on the credit card, as if, for example, you have £600 outstanding and you buy something costing £1000, and you pay off the £1K, you will be paying interest every month in the meantime on both the new purchase and the outstanding debt. And then you'll still be paying off interest on £600.

Whereas if you have 12 months to complete the BNPL, the cost of that credit will probably be factored into the price of what you buy, but then you'll be paying for the cost of other people's credit deals plus credit card interest if you use a card. Is it something you can buy from different retailers or only available at one shop? If it's available from different places, check that you're getting the best deal possible on both the headline price and what you will actually pay, taking into account interest rates, any previous balance on your credit card. And check what the monthly payments will be for borrowing over 12 months.

I suspect a BNPL won't make your credit rating worse so long as you can afford the repayments over the 12 month period that they are due.

We use BNPL a lot for big things with Very, and I've since been able to upgrade my car etc, hasn't impacted my credit score. As long as you pay off on time, you should be fine

Yes, of course you'll have the debt as @fulgrate says, either way, but the overall cost including interest will vary, and adding it to other debts on your credit card might mean you pay more interest on both the item you purchase and the other debts on your credit card.

@elkiedee thank you, that makes sense. Overall I think the BNPL would be cheaper (paying it back in time when I’m back on full pay won’t be an issue) I guess the thing that worries me is that it’s another credit check, while the credit card is already approved so won’t need a search. Wish I could afford the new car now and stop worrying about it!