Is Your Buy Now, Pay Later Habit Affecting Your Mortgage Prospects?
Using buy now, pay later (BNPL) services could be negatively impacting your chances of securing a mortgage, according to brokers.
Mortgage Rejections Despite Perfect Credit Scores
An exclusive Money blog survey revealed that borrowers with a “perfect credit score” but who used BNPL services were still declined mortgages. Some brokers reported that a client's frequent use of BNPL was a key reason for rejection by major high street lenders.
Calls for Improved Assessment Methods
Brokers have urged lenders to reconsider how they evaluate prospective borrowers who have BNPL payments listed on their credit files.
Two of the largest BNPL companies responded, stating they offer innovative financial solutions and suggested that the wider financial sector should adapt accordingly.
Understanding Buy Now, Pay Later
BNPL schemes allow customers to split payments on purchases without interest. These services are used by nearly 11 million people in the UK, according to the Financial Conduct Authority.
For more guidance and deals, visit the Money blog.
Author's summary: Frequent use of buy now, pay later services may harm your mortgage approval chances, prompting calls for updated lending assessments.
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