Does Klarna Data Affect Your Credit Score? It Will Do Very Soon

The insurance industry can benefit from another layer of consumer data, as Klarna agrees to share its default ratios onto credit reference agency sites. The news was covered by City AM earlier this week.

Klarna is a popular option for consumers who cannot access conventional lending sources like banks and credit cards, often because they lack assets, a stable address history, or other well managed types of credit. The Buy-Now-Pay-Later model, which sees payments split into three, rather than one payment at point of sale, has attracted criticism in the UK from money experts, as it could encourage impulsive spending.

For insurers and brokers the Klarna data stream will offer useful insights via TransUnion and Experian from June 1st 2022. For example, it may act as indicator that someone was in financial distress prior to an insurance claim. On the upside, the new Klarna data could also highlight that an individual can manage their money well and so is approved for direct debit payments on their car insurance, Contents, pet cover, annual travel policy etc.

Responding to the news that Klarna will start to report missed payments and usage to UK credit reference agencies, David Beard, Editor-in-Chief of Lendingexpert.co.uk, said;

“This is good news for customers who are responsible users of Klarna because it means they’ll be able to build their credit rating using the service, but bad news if you’ve ever used Klarna and haven’t paid what you owe them on time. If you’ve ever been late paying what you owe Klarna, from June, your credit score may be negatively impacted, meaning you might find it more difficult to be approved for financial products in the future, including for things like mobile phone contracts, credit cards, loans and mortgages.  

“It’s important you regularly check your credit rating. You can do this for free via numerous services and apps. Using Klarna can be a great way to build your credit rating if you haven’t applied for credit products before, but you must always pay what you owe on time; otherwise, using Klarna could harm your credit rating for years to come”. 

About alastair walker 8772 Articles
20 years experience as a journalist and magazine editor. I'm your contact for press releases, events, news and commercial opportunities at Insurance-Edge.Net

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