How Buy Now, Pay Later Loans Could Affect Your Mortgage
Buy Now, Pay Later services have become popular across Kentucky and Indiana—from online checkouts to in-store financing. But did you know these loans already show up in the mortgage process? And soon, they could impact your credit score as well.
What Are Buy Now, Pay Later (BNPL) Loans?
BNPL loans let consumers split payments into smaller installments, often without interest if paid on time. While convenient, these loans still count as debt—and that matters when applying for a home loan.
BNPL and Your Mortgage Application
Even now, lenders must document these obligations during the underwriting process. Just like credit cards or car loans, Buy Now, Pay Later accounts affect your debt-to-income (DTI) ratio—an important factor in mortgage approval.
Could BNPL Affect Your Credit Score?
While most BNPL lenders haven’t reported to credit bureaus in the past, that’s beginning to change. As new policies roll out, late or missed payments could start showing up on your credit report, potentially lowering your score.
On-time payments could also help boost your credit, but only if your BNPL provider reports to the bureaus. Either way, it’s wise to treat BNPL like any other financial obligation.
What You Should Do Before Applying
- Review your current Buy Now, Pay Later obligations
- Avoid opening new BNPL accounts before or during your home loan application
- Keep track of payment schedules to avoid missed payments
- Talk to a mortgage expert to evaluate your debt-to-income ratio
Work With a Local Mortgage Team
At Kentuckiana Mortgage Group, we help homebuyers across Kentucky and Indiana understand how evolving financial tools like BNPL can affect their loan eligibility. We’ll guide you through your credit profile, debt obligations, and everything else needed to move forward with confidence.
