Does Klarna Affect Credit Score

Find out how Klarna affects your credit score in the UK and what it means for your financial health

Does Klarna Affect Credit Score

Buy Now Pay Later (BNPL) services like Klarna have become increasingly popular in the UK, offering a way to spread the cost of purchases without paying interest. From fashion retailers to electronics, Klarna is widely used at online checkouts. But with growing use comes an important question: does Klarna affect your credit score?

The answer isn’t as straightforward as a simple yes or no. It depends on how you use Klarna, what kind of product you use, and how the company reports your activity to credit reference agencies. In this article, we’ll explain how Klarna works, what it means for your credit file, and how to protect your credit score while using it.

What is Klarna

Klarna is a Swedish financial technology company offering BNPL and other credit services to UK shoppers. It allows you to split payments over time without paying interest, provided you meet the terms. Klarna offers several products in the UK:

  • Pay in 3: Spread the cost over three monthly instalments

  • Pay in 30 days: Delay payment by 30 days

  • Financing: Spread the cost over 6 to 36 months with interest-bearing credit

These are regulated differently, and some forms of Klarna involve more credit checks than others.

Who Does Klarna Affect

Klarna is relevant for anyone using it to spread the cost of purchases, especially younger shoppers and people with limited credit histories. It can also be attractive to those trying to avoid credit cards or who want flexible payment options without traditional interest-bearing loans.

However, using Klarna irresponsibly can have consequences for your financial reputation, even if you don’t initially notice them.

How Klarna Affects Credit Scores in the UK

The impact Klarna has on your credit score depends on how you use it and what kind of agreement you enter into:

Soft searches
When you apply for Klarna’s 'Pay in 3' or 'Pay in 30 days' services, they usually conduct a soft credit check. This doesn’t affect your credit score and isn’t visible to other lenders.

Hard searches
If you apply for Klarna’s Financing option — a regulated credit agreement with longer repayment terms — Klarna will run a hard credit check. This appears on your credit report and can influence your credit score, especially if you’ve applied for several forms of credit recently.

Missed or late payments
Regardless of which product you use, failing to repay Klarna on time can now be reported to UK credit reference agencies (Experian and TransUnion). If Klarna reports your missed payments, they can reduce your credit score, just like missed payments on a credit card or loan.

Payment history reporting
Since 2022, Klarna has started reporting on-time payments for its Pay in 3 and Pay in 30 days products to TransUnion and Experian. This means that, if used well, Klarna could potentially help build your credit history.

Buy Now Pay Later and upcoming regulation
The Financial Conduct Authority (FCA) has confirmed that BNPL services will fall under tighter regulation. This is likely to include stricter affordability checks and clearer reporting to credit reference agencies, making Klarna’s impact on your credit score even more significant in the future.

Pros and Cons of Klarna on Your Credit File

Pros

  • Can build your credit history if payments are made on time

  • Soft searches won’t harm your score

  • Offers interest-free borrowing when used responsibly

Cons

  • Missed payments can damage your credit score

  • Hard searches on financing products can lower your score

  • Overuse of BNPL can raise concerns with other lenders

  • Lack of regulation until now means less transparency about long-term credit impact

Real-World Example

Sarah, 25, used Klarna’s Pay in 3 regularly for fashion purchases. She always paid on time, and over 12 months, her good behaviour was reported to TransUnion and Experian. This gave her a stronger credit profile when applying for a phone contract.

Tom, on the other hand, missed several Klarna payments while juggling other short-term borrowing. These missed payments appeared on his credit file and caused his score to drop, leading to rejection for a car finance application.

Legal and Regulatory Considerations

Klarna’s short-term credit products were previously unregulated, which meant they didn’t always have to perform affordability checks or report to credit agencies. However, the Treasury has announced that BNPL firms will soon be subject to FCA regulation.

Once this is in place, providers like Klarna will need to:

  • Offer clearer terms and protections

  • Conduct affordability assessments

  • Handle complaints through the Financial Ombudsman Service

  • Report more consistently to credit reference agencies

These changes aim to protect consumers and bring Klarna closer in line with credit card and loan providers.

Costs and Fees

Klarna’s Pay in 3 and Pay in 30 Days services are interest-free, provided you pay on time. However, missed payments can result in restricted access to Klarna, and you may be passed to a debt collection agency. Klarna doesn’t currently charge late fees in the UK, but your credit file may still be affected.

The Klarna Financing option includes interest, which varies depending on your agreement and may require a more thorough credit check.

Are There Alternatives

If you’re concerned about Klarna’s effect on your credit score or want more predictable borrowing, consider:

  • 0% interest credit cards: Offer longer repayment terms and full credit file reporting

  • Overdrafts: More flexible for short-term needs but may be more expensive

  • Budgeting tools: Apps like Monzo or Starling help you plan purchases without needing BNPL

Practical Tips for Using Klarna Wisely

  • Only use Klarna for purchases you can afford to repay

  • Treat it like any other form of borrowing — not ‘free money’

  • Set payment reminders or use direct debit if available

  • Check your credit report monthly to see how it’s being affected

  • If you’re applying for a mortgage or loan soon, avoid multiple BNPL purchases or applications

  • Don’t use Klarna to cover essential bills — it’s not a replacement for proper budgeting

Final Thought

Klarna can be a useful tool for spreading costs without interest, but it’s not risk-free. The way you use Klarna can influence your credit score, either positively or negatively. With greater transparency and regulation on the horizon, it’s more important than ever to treat BNPL services with the same caution and responsibility as any other form of borrowing.

If you’re building credit, Klarna might help — but if you're struggling with repayments or already have multiple credit lines, it may be doing more harm than good.