Ravi Kumar, 35, was like many working professionals exploring urban life. A tech-savvy buyer, he loved the ease of online shopping and quickly got hooked to Buy Now, Pay Later (BNPL) options on apps like ZestMoney, LazyPay, Simpl or Amazon Pay Later. The instalments seemed small and manageable, and they never charged him upfront interest. So, he kept signing up for more.

Ravi Kumar, 35, was like many working professionals exploring urban life. A tech-savvy buyer, he loved the ease of online shopping and quickly got hooked to Buy Now, Pay Later (BNPL) options on apps like ZestMoney, LazyPay, Simpl or Amazon Pay Later. The instalments seemed small and manageable, and they never charged him upfront interest. So, he kept signing up for more.

What started as a ₹2,000 phone accessory turned into a ₹15,000 gadget, followed by a vacation booking and more, each split into easy EMIs. But as the EMIs piled up, Ravi began missing deadlines. He assumed a few late fees wouldn’t matter. Until one day, his loan application for a car was rejected due to a poor credit score. His score had dropped from a healthy 780 to a worrying 610, all because of mismanaged BNPL repayments.

What affects your credit score?

Credit scores typically range from 300 to 900, with anything above 750 considered good. Lenders use this number to determine how creditworthy you are. A low score means higher interest rates, lower credit limits, or sometimes, outright loan rejection.

Here’s a breakdown of what affects your credit score and where BNPL fits in:

Payment history (35% weight)

This is the most important factor. It tracks whether you pay your credit card bills, EMIs, and BNPL dues on time. “Missed EMI or credit card payments can lower your score by 50–100 points,” said Adhil Shetty, CEO of BankBazaar.com.

BNPL repayments, if delayed, are reported to credit bureaus just like regular loans. Even a single missed payment can tarnish your score.

Credit Utilisation Ratio (CUR)

This is the percentage of your total credit that you are using. If you max out your credit cards or take multiple BNPL loans, your CUR shoots up. “Try keeping your CUR under 30% to avoid being seen as financially stressed,” said Shetty. BNPL limits are small but using too many can still inflate your overall usage ratio.

Credit mix

Having a healthy mix of secured credit (like home or auto loans) and unsecured credit (like credit cards and BNPL) reflects positively. “Too many unsecured loans, especially short-term ones like BNPL, may label you as a risky borrower,” Shetty added. A credit portfolio dominated by BNPL or personal loans can hurt your profile.

Credit inquiries

Each time you apply for credit, it creates a “hard inquiry” on your report. Too many of these in a short time frame can dent your score. BNPL services often perform hard checks before approving you, and stacking multiple BNPL applications can trigger red flags.

Is BNPL the main villain?

BNPL is not a villain. When managed properly, it is a useful tool that helps you break down payments over a few months. However, it becomes a problem when misused or overused.

“If you have availed of a BNPL product, it is recorded on your credit report. Any missed payments or defaults will impact your score,” Shetty warned.

So, while BNPL isn’t the sole reason for a falling credit score, it can certainly be a major contributor, especially for those juggling multiple loans and forgetting due dates.