Does Affirm Affect Your Credit Score?

Affirm is one of several popular ‘Buy Now, Pay Later’ options, which have been exploding in popularity the past few years. This payment option is best suited for consumers that want to purchase something now, but spread out their payments over a short period of time, without taking on debt or loans. It is a financing option which is also known as a point of sale installment loan. This means that an Affirm will offer a customer small installment loan as a means to pay rather than other payment options, like using a credit card.

In essence, Affirm is a third party lender which is used by many merchants as a way to offer customers a flexible payment method. Merchants that take on an Affirm will pay a service charge and an Affirm loans the money to a customer. Bear in mind that if you use Affirm, you will need to pay monthly or biweekly so that the loan eventually gets paid off.

But, does Affirm affect your credit score?? The answers is that it depends, read below for when it likely will or likely will not.

Will Affirm Usually Do A Credit Check?

People that use Affirm will usually undergo a credit check. Despite that these credit checks are usually soft credit checks. While, this will include the credit history of the person applying, it does not directly affect your current credit score. On top of that it will also not be present on your credit report.

If you use Affirm you may be able to get pre-qualified financing. There will also be no obligation to use the buy now and pay later plan, unless the you actually purchases something.

Will Affirm affect my credit score?

Affirm may seem like a deal too good to be true. Some may fear that it will negatively impact your credit score.

Since Affirm has two main products there are two answers:

1. For the Pay-in-4, interest free product:

• Likely do not report to credit agencies

2. For every two weeks or monthly payments loans:

• Likely do report to credit agencies

Why only ‘likely?’ Because, unfortunately, as we carefully dug through all of the fine print on Affirm’s website and in their loan agreements and documents, they never give a crystal clear, firm answer.

We think this is likely intentional. Reporting to credit agencies costs time, money, and resources for credit companies like Affirm.

So they likely prefer not to bother on their super simple, straightforward Pay-in-4 product, which we think they don’t make much money on and is likely essentially a loss leader.

However, they are sure to include language in their agreements like ‘may report,’ so that they can report bad actors who do not pay them back, or pay on time, even on a simple Pay-in-4.

For the actual loans, these are the pay every two weeks or make monthly payments, which do charge interest, we think they likely do normal credit reporting.

If you’re concerned about a negative impact to your credit:

• You could face a negative impact to your credit regardless of which product from Affirm you’re using, if you fail to make all of your payments on time. Affirm clearly gives themselves the right to report to credit bureaus like Experian, Transunion and Equifax.

If you’re concerned about a positive impact to your credit:

• If you use Affirm and make all payments on time, you likely will only see a positive impact to your credit score if you use the interest-bearing, monthly payments product

Are there any alternatives to Affirm?

At the moment, Affirm is one of the most popular BNPL providers inside the United States. However, there are actually a ton of alternative service options that you may be able to make use of.

We have found some of the best alternative options out there and listed them below for you to peruse:

• Klarna
• Humm
• AfterPay
• LatitudePay
• StepPay
• Zippay

Make sure to do your own research before you go for a new BNPL.