Affirm is a financial technology company that provides a “buy now, pay later” (BNPL) service that partners with retailers and online stores to offer flexible payment options at checkout.
You’ve probably noticed Affirm as a payment option at checkout when you shop. Affirm’s most popular option divides your purchase into four interest-free payments due every two weeks.
But how does it affect your credit?
Does Affirm Report to Credit Bureaus?
Yes. Affirm does report to credit bureaus. Here’s how it works, effective April/May 2025:
Prior to April 1, 2025: Some longer-term Affirm loans were reported to Experian. Shorter “Pay in 4” plans generally were not, unless they became delinquent.
On or after April 1, 2025: All Affirm payment plans, including “Pay in 4” and longer-term monthly installments, are being reported to Experian.
On or after May 1, 2025: All Affirm payment plans are also being reported to TransUnion. Affirm may report to other credit bureaus in the future.
Taking out a loan/payment plan: This is where it can affect your credit. Positive payment history (on-time payments) can help build your credit. Missed or late payments can hurt it.
Multiple loans: While there’s no official limit to how many Affirm loans you can have at once, opening too many new accounts in a short period can sometimes be viewed by lenders as a higher risk, potentially impacting your credit score. Affirm itself will also consider your recent credit activity when reviewing new applications.
In essence, Affirm is moving towards a more transparent and comprehensive reporting model, which means each instance of using their service to pay over time will be reflected on your credit report.
This can be a good thing for building credit if you manage your payments responsibly, but it also means irresponsible use will negatively impact your scores. This credit reporting practice is similar to how Klarna reports reports to credit bureaus.
But there can be a downside to Affirm’s easy credit.
Can Affirm hurt your credit score?
There are three instances where Affirm may negatively impact your credit score.
(1) Late Payments
Because Affirm reports payments to Experian, on-time payments can help you establish or improve your credit history. But Affirm may also report late payments too. Late payments can hurt you credit score up to 100 points.
(2) Average Age of Accounts (AAoA)
One determining factor in how credit scores work is the age of your credit accounts. Length of credit history is 15% of your overall score.
Generally, a longer AAoA indicates better creditworthiness. When you open a new Affirm loan that gets reported to Experian, it’s considered a new account. That means each loan, no matter how large or small, will count as a separate account.
New accounts reduce your overall AAoA, potentially lowering your credit score. The impact will depend on the length of your existing credit history.
(3) Consumer Finance Loan
Affirm’s monthly payment option is considered a consumer finance loan. But while this makes it easier for consumers to pay for services, the credit bureaus consider this type of loan risky.
Research has shown that consumers with consumer finance company loans appearing on their credit report represent higher insurance loss risk than those with no consumer finance company loans.
Unfortunately, there’s no distinction in paying on time or late payments, whether open or closed, FICO scoring model uses the presence of a consumer finance company accounts on a credit report as a predictive risk factor. If you’ve ever been denied credit you may have witnessed “Presence of a consumer finance account” as a FICO reason code.
Personal loans from a bank or credit union will not be scored as a consumer finance account.
Should you use Affirm to make purchases?
If you’re confident in making on-time payments, Affirm can fit into your budget plan. It’s a popular option among the “Buy Now Pay Later” companies. In fact, the global point of sale market size is projected to grow from $33.41 billion in 2024 to $110.22 billion by 2032.
Just be mindful of how new credit accounts can affect your credit history. Not all loans are reported to the credit bureaus like Affirm’s “Pay in 4” interest-free payment plans, unless it becomes 30+ days overdue.
