The cost of living is rising. Inflation is at its highest rate for 30 years. And it’s hurting young women, who face historically high housing and living costs. Enter: buy now, pay later (BNPL) – a phenomenon that allows young people to buy things they can’t afford. Thirty-nine percent of R29 readers say they have used a buy now, pay later service. Is this a radical initiative to help young people manage their money and buy what they want (as providers argue) or a way of getting young people into debt by spending frivolously? Refinery29 investigates. In our series Paying For It, this week we will be hearing from the women who use BNPL services.
Thirty-four-year-old Aanya* is a mother of one. She works in marketing and lives in north London with her husband. She says that buy now, pay later (BNPL) has wrecked her credit score. The most galling thing about it? She actually used it as a payment method by accident. This was seven years ago and she’s still dealing with the fallout today.
"I was buying some baby clothes for my daughter while I was pregnant with her. I had no intention to use BNPL to pay but, at that time, the way the website and the payment method was set up meant that the first payment choice you were given was BNPL," Aanya explains.
Aanya didn’t really understand what BNPL was but she wanted the clothes so, she says, she thought to herself: "I’ll just get on with it and pay."
The baby clothes Aanya purchased that day cost around £300 in total. She didn’t need to use credit to make the purchase and wouldn’t have considered doing so had she not been presented with the BNPL payment option. This meant she had to pay £50 once a month for six months.
"Annually, I earn between £30,000 and £40,000," she continues, "so buying the baby clothes wasn’t a problem. I’ve never relied on credit cards or loans. I didn’t need to split the payment."
The problems started very soon after Aanya made the purchase. "Obviously I didn’t really understand how the BNPL scheme worked. I got a follow-up email and it didn’t seem very clear to me," she explains. "I kept getting emails and I think I got a letter too but I actually thought it was an advert because it looked like a catalogue with pictures."
Aanya realised that something had gone wrong a month later when she checked her credit score and realised it had plummeted. "My credit score had gone down by 200 points," she says. "I was horrified. I am very organised and I try to stay on top of these things because I don’t like the feeling of getting into financial trouble because I don’t have British citizenship so I try to be on my best behaviour at all times. Whether that’s rational or not, I worry about my visa!"
Panicked, Aanya couldn’t figure out what was going on so she did some digging. "I looked further into what had happened to my credit score and it said I had missed a payment," she explains. "At first I thought it was a scam but then I realised it was the BNPL purchase."
I think buy now, pay later schemes are encouraging women who don't have financial literacy to shop.
The most frustrating thing for Aanya was that she could afford to pay the entire amount straightaway. Nonetheless, the credit score she had worked hard to build was trashed.
"I wasn’t financially struggling so I didn’t need BNPL but the way it had all been communicated to me was confusing," she says.
Aanya paid up but since her brush with BNPL she has continued to have problems with getting credit.
"I’ve had trouble getting mobile phone contracts and issues with mortgages," she says. "Obviously it shows on my credit record that I used BNPL and mortgage companies don’t like that. They said the fact that I missed a payment that was so small suggested that I couldn’t afford a mortgage."
As Refinery29 reported in 2021, young women are having mortgage applications declined because their bank statements show that they have used BNPL schemes, even if they have not missed a payment.
Aanya called the credit rating agencies and tried to have the missed payment removed from her records. She was told that this was impossible and that the missed payment would stay on her credit score "for at least six years".
"I was super upset. I was really angry. It was such a stupid mistake for me to make," she says. "I felt awful because it has impacted my husband too, it has affected our ability to purchase a home together."
BNPL is more mainstream now. Aanya says if she’d known more about it, perhaps she wouldn’t have fallen foul of what, as she puts it, appeared to be a "marketing offer".
"I think BNPL schemes are evil," Aanya concludes. "I think it plays with people’s financial vulnerability and lack of knowledge about money. The fact that you can make such a tiny mistake like I did and have it follow you for years feels so unfair. I do not think the way that BNPL is marketed is fair, it feels targeted towards people who don’t have a knowledge of finance because I guess these companies make money if they mess it up. It also seems to be mainly marketed towards women – buy that little top or dress, don’t worry about it. I think it’s encouraging women who don’t have financial literacy to shop. I think it should be properly regulated or at least limited to items such as essentials."
When all is said and done, Aanya says that using BNPL once has caused her untold amounts of stress and anxiety. "If I – someone who isn’t financially struggling – can go through this, I just wonder how people who are battling to make ends meet must feel."
*Name changed to protect identity
This article was updated on 24.02.22 to remove references to Klarna as they were not the BNPL provider used by Aanya.