Does Clearpay Affect Credit Score

Does Clearpay Affect Credit Score

Clearpay is one of the fastest-growing Buy Now Pay Later (BNPL) services in the UK, offering shoppers a way to split the cost of purchases into four interest-free payments. With the rise in popularity of BNPL platforms like Clearpay, many people are now wondering whether using these services can affect their credit score.

In this article, we’ll explore how Clearpay works, how it interacts with UK credit reference agencies, and what that means for your credit score — positively or negatively. We’ll also look at how to use Clearpay responsibly and offer advice to help you stay on top of your financial health.

What Is Clearpay

Clearpay is a BNPL provider that allows shoppers to pay for goods in four equal instalments, taken automatically every two weeks. It’s available at thousands of UK retailers and is often used for fashion, beauty, electronics and homeware purchases.

Unlike traditional credit cards or loans, Clearpay doesn’t charge interest or fees unless you miss a payment. This makes it appealing to younger shoppers and those wary of high-cost borrowing. However, like any form of credit, it must be used carefully.

Who Uses Clearpay

Clearpay is commonly used by:

• Shoppers under 35, particularly students and young professionals

• People without credit cards, looking for an alternative way to manage spending

• Individuals with limited or no credit history

• Consumers trying to budget or spread the cost of non-essential purchases

While Clearpay can help with short-term cash flow, it can also lead to unintentional overspending or repayment issues if not managed properly.

How Clearpay Affects Credit Scores

Clearpay’s impact on your credit score depends on how you use the service and what stage of the credit lifecycle you’re in. Here’s what you need to know.

Soft credit checks only
Clearpay does not currently perform a hard credit check when you sign up or make a purchase. Instead, they use soft searches to assess eligibility. Soft checks do not affect your credit score and are only visible to you.

No regular reporting to credit reference agencies
As of now, Clearpay does not report your on-time payment history to major UK credit reference agencies like Experian, Equifax or TransUnion. This means using Clearpay successfully won’t directly build your credit score.

Missed payments can be passed to debt collectors
While Clearpay does not report your repayment history in real time, missed or unpaid balances may be passed to external debt collection agencies. If this happens, the collection account could be reported to credit reference agencies and negatively impact your credit file.

Upcoming regulation may change this
The UK government, through the Financial Conduct Authority (FCA), is in the process of introducing stronger regulation for BNPL services like Clearpay. Once in place, these rules are expected to require:

• Clearer terms and affordability checks

• More consistent reporting of both on-time and missed payments

• Stronger consumer protection

This means Clearpay could start affecting your credit score more directly in the near future.

Pros and Cons of Using Clearpay

Pros

• No interest if payments are made on time

• Easy to set up and use at checkout

• No impact on your credit score from soft checks

• Can help manage short-term costs

Cons

• Doesn’t build your credit score

• Missed payments can result in referral to debt collectors

• May lead to overbuying or budgeting issues

• No FCA regulation yet, meaning weaker consumer protections

Real-World Example

Ella, 23, uses Clearpay regularly for clothes and makeup. She always pays on time and likes the flexibility. However, her payments don’t show up on her credit report, so her score hasn’t improved despite her good behaviour.

Jake, 30, missed two Clearpay instalments after losing his job. He ignored the reminders and the debt was eventually passed to a collection agency. Months later, the unpaid balance appeared on his credit report, lowering his score and making it harder to get approved for a car finance agreement.

Legal and Regulatory Considerations

At present, Clearpay is not regulated by the Financial Conduct Authority in the same way as traditional lenders. This means:

• You can’t escalate complaints to the Financial Ombudsman

• The company isn’t required to carry out full affordability checks

• Missed payments may not be treated with the same protections as regulated debt

However, regulatory changes are on the horizon. HM Treasury has confirmed that BNPL products will be brought under FCA regulation, though the exact timeline remains uncertain. When that happens, it’s likely Clearpay and other providers will start reporting to credit reference agencies more consistently.

Costs and Late Fees

Clearpay doesn’t charge interest on any of its products. However, if you miss a payment:

• You may be charged a late fee of up to £6 per missed instalment

• Total late fees are capped at 25 percent of the order value

• Your account may be frozen until the balance is paid

Persistent non-payment may result in the debt being sent to a collection agency. While this doesn’t happen immediately, it's a key reason to stay on top of your payment schedule.

Alternatives to Clearpay

If you’re using Clearpay regularly or to cover essentials, it may be worth considering other options:

• 0 percent interest credit cards, which can help build your credit if used responsibly

• Budgeting apps like Monzo, Plum or Snoop to track spending and manage cash flow

• Savings accounts or emergency funds to avoid needing short-term borrowing

• Retailer payment plans that offer more structured and regulated finance

Clearpay is best used for occasional purchases that you know you can repay quickly.

Tips for Using Clearpay Safely

• Set payment reminders or enable automatic payments

• Limit how many Clearpay purchases you have active at one time

• Don’t use Clearpay for essentials like food or bills

• Check your budget before confirming a purchase

• Monitor your bank balance to ensure funds are available on the due date

• Check your credit report regularly to catch any negative entries

Final Thought

Clearpay may not currently affect your credit score if you use it responsibly and repay on time, but it’s not risk-free. Missed payments can still lead to collection activity, and upcoming regulation is likely to increase transparency and accountability for BNPL providers.

If you’re managing your money well, Clearpay can be a helpful tool. But if you’re relying on it regularly or falling behind, it may be time to step back and review your spending habits.

Your credit score reflects your overall financial health — and while Clearpay may not influence it today, your wider borrowing behaviour certainly will