Mortgages - BNPL - Klarna/Clearpay etc

Siobhan7

Morning all

I have just read an article that has got my anxiety through the roof. Someone had their mortgage rejected because she used the Buy Now Pay Later (BNPL) schemes such as Klarna/Clearpay/Laybuy.

I use Clearpay as I heard it can increase your credit rating as long as you don't miss payments etc. I am so confused. If it's true that lenders reject applications based on BNPL use then is there a expiry on this? (e.g if I last used them 2 years ago does that count?)

I am so worried. I am a few years off being in a position to buy. I am happy to cease all usage immediately if I know it will stop me getting a mortgage.

I also have a credit card which I use for stuff I already have the money for (e.g food shopping, essentials) and as soon as I receive the statement I pay the balance off in full. Will this get in my way?

I know nothing about mortgages. They scare me if I am honest. I am ex-bankrupt. It will drop off my credit file in 2024. I am so much better with my finances now (back then I had a job where I was paying £250 a month in petrol to get there and back, I also had a business loan for my start up business and my recently purchased car broke and there was a huge legal battle for the dealership to sort but I ended up with no car for a while to run my business or to get to work) 

I do not buy anything if I don't have the money upfront. I am so strict with my finances now. I only use this credit card and BNPL because I have read it helps with your credit rating.

Why can't we be taught this stuff in school? I have NEVER used algebra or trigonometry. They should teach about mortgages, how to read your payslip, tax codes. Life skills!

Thanks in advance!

[Deleted User]

Any debt can impact your affordability.

If you're deliberately running up a debt to change the pretend credit score, stop it now. Minimise your debt. Use your credit card but clear in full every month.

Siobhan7

I do exactly that with the credit card. If I purchase something, I make sure I have the money for it and I put it to one side until the statement arrives then the same day I receive my statement, I clear it in full.

As for Clearpay I read that it can improve your score but clearly that was bad advice. I have cleared my Clearpay balance and have closed my account. I am gutted. I just hope the years between now and when I can apply for a mortgage can heal it!

K_S

@siobhan7 Let me set your mind at ease Your old Klanra/Clearpay accounts will not have any material impact on a mortgage application in 2024.

Siobhan7

K_S said:

@siobhan7 Let me set your mind at ease Your old Klanra/Clearpay accounts will not have any material impact on a mortgage application in 2024.

Thank you! That has really helped

ukri

I’ve used Clearpay quite a few times, never seen it on my credit report? While credit file did your account show up on?

Siobhan7

ukri said:

I’ve used Clearpay quite a few times, never seen it on my credit report? While credit file did your account show up on?

Clearpay should appear surely? - it’s a borrowing thing. I’ve previously used Klarna and that’s on there. Can’t see Clearpay on Credit Karma (which is what I use).

Either way, I’ve paid off my Clearpay balance and I’ve requested to close my account. Don’t want to risk anything getting in the way of my mortgage application in a few years! 

MWT

May be a good idea to use 'Checkmyfile' for coverage of all 3 of the major credit agencies.

Siobhan7

MWT said:

May be a good idea to use 'Checkmyfile' for coverage of all 3 of the major credit agencies.

I just went to sign up but a bit dubious about putting my card details in

MWT

Siobhan7 said:

MWT said:

May be a good idea to use 'Checkmyfile' for coverage of all 3 of the major credit agencies.

I just went to sign up but a bit dubious about putting my card details in

They will not charge if you cancel before the end of the free period, but frankly, if you are contemplating a mortgage it is worth paying for the service to make sure you don't have anything you are unaware of in the background.

If you are still a couple of years away from actively trying to buy I would take the free period now for a sanity check and then cancel during the free period. Then once you are within a few months of the mortgage take the service and pay for it while you are going through the mortgage process.