Buy-now, pay-later lender to share customers’ data

BUY-NOW, pay-later shoppers could struggle to get a mortgage after leading lender Klarna said it would report missed payments to credit agencies.

Klarna, which has 16million UK customers, allows borrowers to put off payments or split them into instalments. The Swedish lender charges no interest or late fees. But buy-now, pay-later products are still unregulated and critics fear they encourage shoppers to spend more than they can afford.

And now Klarna says it will begin sharing customer data with credit agencies Experian and Trans-Union next month. It means borrowers who make their repayments in full and on time could use the service to improve their credit scores. But those who fall behind may see their credit scores and borrowing power cut.

The Financial Conduct Authority watchdog last year declared an ‘urgent need’ for the sector to be regulated. But more than 12 months later, campaigners are still waiting for action.