BNPL lender Zilch has started reporting its 3 million customers’ borrowing data to UK credit bureaus, in a way that will impact credit scores of up to 3 million customers.
Until now Zilch has had partnerships with individual credit bureaus like Experian, but has only used this data as part of its affordability assessments to perform “soft” credit checks on borrowers.
The lender explained that it will now be integrating with all the credit bureaus in a way that will influence credit scores.
“From this month, Zilch is integrating with all reputable CRAs to start influencing customers’ credit scores, giving them the opportunity to improve and build their credit history if they keep up to date with Zilch and all their credit payments,” the company said.
The UK has been working towards a regulatory system for the industry amid concerns that consumers are being put at financial risk by not understanding the terms of purchasing with BNPL. While there has been a considerable wait to see the new rules, it is understood that they will see BNPL purchases treated as loans. The decision will mean that failure to keep up with BNPL payments will be treated similarly to a failure to repay loans by credit agencies.
The Financial Conduct Authority (FCA) has repeatedly stressed the importance of introducing regulation amid rising demand for BNPL services. A recent survey from the Centre for Financial Capability found that the demand for BNPL products had risen among all age groups for 2023.