New Report Finds 19% of Consumers Use BNPL to Bypass Hard Credit Checks

“Buy now, pay later” (BNPL) products break down payments into more affordable installments, giving consumers more control over the timing of their expenses. A recent PYMNTS Intelligence report entitled “The Credit Accessibility Series: BNPL’s Wide-Ranging Impact on Consumers and Merchants” found that 19 percent of consumers apply for BNPL products to avoid hard checks that negatively impact their credit scores.

“In an uncertain economic environment with high inflation, accessing credit payment options that most effectively preserve cash is likely to become increasingly important for consumers, especially those who live paycheck to paycheck,” the study reads. BNPL has garnered consistent use across demographic groups, with over half of respondents utilizing it to efficiently manage their cash flow.

BNPL usage varies across demographics, with millennials at 20 percent use and baby boomers at 11 percent, which could reflect baby boomers’ more reserved spending habits, especially among those with fixed incomes. Alternatively, millennials may be more inclined to use BNPL since they are in their peak earning phase.

One-third of BNPL users believed that using the products positively affected their credit scores, even though BNPL transactions are not directly taken into consideration in credit scoring models. 30 percent of respondents said that low or nonexistent interest rates made them apply for BNPL.

Roughly 10 percent of respondents each said they used BNPL because it was their only accessible credit option, they were unable to cover bills without it, and they were faced with a financial emergency. If BNPL were not an option, nearly half of respondents said they would cancel or postpone a purchase.