" class="no-js "lang="en-US"> Klarna to report credit scores starting in June
Sunday, April 21, 2024

Klarna to report credit scores starting in June

Buy now, pay later (BNPL) giant Klarna will start reporting data on customers’ usage of its products to credit bureaus in the UK.

It will begin sharing BNPL purchases made in the UK with the credit reference agencies (CRAs) Experian and TransUnion. The information on its 16 million British users will show if purchases were paid off as an installment loan in time or are falling behind on their payments.

“Until now, the UK’s credit reporting infrastructure was built with traditional credit in mind. Klarna has partnered closely with the CRAs in the UK over the past two years to help them update their systems to the point where they can now receive and process BNPL data in a fair and balanced way,” it explains on the Klarna website.

The changes include purchases users make on or after June 1 using Klarna Pay in 30, Pay in 3, in-app shopping, and Klarna Card.


The development sets a strong precedent for the BNPL sector, which has flourished due to streamlined application processes and minimal regulatory oversight.

However, those very reasons have led to much concern. The Financial Conduct Authority (FCA) expressed worry about this lack of visibility in its Woolard Review in February 2021. The review claimed it could be relatively easy to accumulate £1,000 worth of debt that mainstream lenders would not see. It also reported that providers tend to focus on risks to firms rather than whether customers can afford repayments.

The FCA does not regulate these firms but does review the terms and conditions of consumer contracts for fairness, and it is meant to ensure that the BNPL industry adopts high standards in its terms and conditions.

Klarna reported higher customer defaults for 2021 – rising from 0.56% of gross merchandise volumes in 2019 to 0.67% last year. In the same period, its net losses expanded by five times to $575 million last year, which CEO Sebastian Siemiatkowski put down to its expansion into new markets, as shown in its full-year results.

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