Credit reporting for Buy Now, Pay Later and Short-term Interest-free Credit purchases could help customers to improve their credit ratings – creating an additional incentive for customers to choose checkout finance, our CEO Todd Latham wrote in a recent article for Maddyness.
Government regulation for Buy Now, Pay Later (BNPL) and Short-term Interest-free Credit (STIFC) is fast approaching, and industry commentators predict that it will include legislation around credit reporting.
This means lenders will be obligated to report details of their loans to credit referencing agencies, which in turn means customers may have BNPL and STIFC loan details entered into their credit files.
This could help shoppers to improve their credit scores if they use their finance responsibly.
Credit reporting will be a significant boon for the industry, offering an additional incentive to choose BNPL and STIFC at the checkout.
This regulatory change will appeal especially to young people. While they are much more likely to take advantage of checkout finance products, preferring them to revolving credit models such as credit cards, young people still prefer to take out credit cards when it comes to improving their credit ratings.
In fact, one-third of young people who have taken out a credit card say they did so specifically to improve their credit rating.
Young people have a particular interest in credit scoring, since they are more likely to be applying for a first mortgage, business loan or other form of credit. Regulation in the retail finance sector could therefore help to support these consumers, while offering an additional incentive for them to choose finance at the checkout.
In the build-up to the implementation of regulation in the UK, Divido CEO Todd Latham penned an op-ed for the French online magazine Maddyness.
To continue reading, check out Todd’s full article on the Maddyness website, here.
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