New affordability checks for Buy Now Pay Later could block some shoppers — how to reduce the risk

Recent rules require providers offering Buy Now Pay Later (BNPL) to carry out affordability checks that may prevent some customers from using these plans. Consumers can take practical steps—checking credit records, reducing outstanding debts and keeping proof of income—to improve their chances.

Regulators have introduced new rules requiring providers of Buy Now Pay Later (BNPL) services to carry out affordability assessments before approving instalment plans. As a result, some consumers who previously accessed BNPL at the point of sale may find applications declined or subject to additional scrutiny.

What the checks involve

The assessments are intended to confirm that a customer can meet repayments without undue hardship. Depending on the provider, checks may involve a review of recent credit records, outstanding borrowing and evidence of income or regular outgoings. A higher level of scrutiny means that people with thin or damaged credit histories, high existing debts or irregular income could be more likely to be turned down than before.

Steps consumers can take

There are several practical steps that can help reduce the likelihood of a refusal. Before applying, consumers should review their credit report and correct any errors; reduce balances on existing credit where possible; and have up-to-date proof of income or bank statements available. Limiting the number of applications in a short period, choosing smaller purchase amounts or longer repayment terms and comparing providers’ eligibility checks can also make approval more likely.

If you are declined

Providers should explain why an application was refused and tell customers how to request a review or provide additional information. If a consumer believes a decision was made in error, they can ask the provider to reassess the application or to supply details to the credit reference agencies. For those facing repeated refusals, alternatives include traditional credit products, a lower-cost loan where affordable, or speaking to a financial adviser or debt charity for tailored help.

What to keep in mind

The changes are aimed at reducing problem debt by ensuring credit is affordable, but they also mean consumers must be better prepared when seeking BNPL finance. Shoppers should consider whether instalment buying is the most appropriate option for their circumstances and be aware of late fees or charges that can increase the cost of borrowing.