How buy-now, pay-later shopping splurges can impact your home loan application

How buy-now, pay-later shopping splurges can impact your home loan application

You could be right if you think interest-free payment plans like Klarna, Laybuy or Clearpay seem too good to be true.

While they’re ideal for getting away from short-term financial shortfall, regular usage of payment plans and pay day loans can harm credit scores and give a wide berth to mortgage applications from being qualified.

By Louisa Fletcher

Pay day loans, short-term loans and those ‘buy now, spend later’ schemes all seem so safe, don’t they? Made to make an indulgent purchase just a little better to manage or provide a ‘helping hand’ to bridge the space between now as soon as you obtain your salary but need emergency funds to cover an urgent bill, they are able to appear to be the option that is easy. In the end, it is just a few hundred pounds and you are able to spend it off over three or four months, therefore what’s the harm, right?

Well, that most depends. If you’re looking to buy a house in the future, it may make life instead tricky.

Protecting your credit rating

The truth is, borrowing even a few hundred pounds approximately on a loan that is payday no matter whether or otherwise not you repay it in complete as well as on time, renders a ‘flag’ on your own credit history for six years.

Although some term that is short cash advance companies claim that having a successfully paid back loan can boost your credit rating, there clearly was another major factor to consider that doesn’t constantly appear to get the airtime it must.Continue reading