Does Clearpay Impact Your Credit Score?

As the cost-of-living tightens its grip across the UK, savvy shoppers are turning to services like Clearpay to ease the squeeze.

These Buy Now, Pay Later (BNPL) options are becoming a go-to for many people looking to make purchases more manageable when budgets are tight.

However, before you jump on the Clearpay bandwagon, it's wise to pump the brakes and consider how it might affect your credit score.

Here, we’ll be looking under the bonnet to see how using Clearpay influences your score, and in turn, your chances of snagging car finance.

Got a specific question? Why not jump to:

What is ‘Buy Now, Pay Later’?

Services like Clearpay are shaking up the way we shop, offering a solution to spread the cost of those must-have purchases.

Instead of forking out the full amount at the till, buy now, pay later schemes step in to cover your costs upfront. You then simply pay back the amount in manageable chunks.

The setup varies from one service to another. With Clearpay, it asks you to settle the balance in four instalments.

These are spaced out over two weeks, with the first payment due at the time of purchase. 
One of the most appealing things about these services is that if you stick to the schedule, you won't be hit with interest charges.

Just watch out for those pesky late fees if a payment slips through the net.

Does Clearpay affect your credit score?

If you’re wondering whether Clearpay will affect your credit, the short answer is no if you play your cards right and stick to your payment plan.

If you let a payment slip through the cracks, it could get back to credit agencies, potentially leaving a mark on your credit history.

If you fall behind completely on what you owe, Clearpay may take measures to reclaim the funds to cover the outstanding debt. In the most extreme circumstances this could even involve a debt collection agency which will leave a negative mark on your credit score.

More credit guides

Will using Clearpay improve my credit score?

Clearpay doesn’t report to credit reference agencies, so using it as a stepping stone to boost your score isn't an option.

However, it works the other way too. If you miss a payment, it won't immediately stain your credit report. Trouble only starts if debt collectors’ step into the picture.

Do Clearpay do a credit check?

If the words "credit check" make you nervous, you'll be relieved to know Clearpay opts for the gentler "soft" credit check.

This type of credit check is like a shadow on your report. It’s there, but it doesn’t leave a lasting trace on your credit score.

So, while services like Clearpay won't directly affect your credit score, it's all about using them wisely.

Just like Clearpay, we at Carmoola use a soft search approach to check your eligibility. This keeps your score safe while giving you a heads-up on your chances for approval.

FAQs About Credit Scores:

Do all Buy Now, Pay Later companies conduct ‘soft’ credit checks?

Not all Buy Now, Pay Later (BNPL) companies perform 'soft' credit checks. The approach varies by company. Some may conduct a soft check, which doesn't affect your credit score, while others may perform a hard check, or may not check your credit at all. It's important to read each BNPL company's policy to understand their credit check process.

What happens if I miss my payments?

Missing payments with a BNPL service like Clearpay can have consequences. You may incur late fees, and it could negatively impact your credit score if the missed payment is reported to credit agencies. It could also affect your ability to use BNPL services in the future. Consistent on-time payments are crucial to maintain a good relationship with BNPL services and protect your credit score.

What can I do to improve my credit score?

To improve your credit score, ensure you make payments on time for all debts and bills. Keep credit utilisation low, regularly check your credit report for errors, and avoid applying for new credit frequently. Also, having a mix of different types of credit and a long history of responsible credit use can help boost your score.

What are the risks of Clearpay?

The risks of using Clearpay include potential late fees if you miss payments, and possible negative impacts on your credit score if these missed payments are reported. Relying too heavily on BNPL services like Clearpay can also lead to overspending and accumulating unmanageable debt. This can further harm your credit score and land you in trouble financially.