Credit Building > Can Klarna Ruin Your Credit Score?

Can Klarna Ruin Your Credit Score?

Wollit Team5 minute read · Updated 26th February 2025

If you're concerned about how Klarna might affect your financial reputation, you're not alone. Many users have expressed worries with statements like "Klarna ruined my credit score" after experiencing unexpected consequences from using the popular Buy Now, Pay Later service. Understanding how Klarna interacts with your credit profile is essential for making informed decisions about using these convenient payment options.

Understanding Klarna and its payment options

Klarna is a Buy Now, Pay Later (BNPL) service that offers flexibility in how you pay for purchases. Instead of paying the full amount upfront, Klarna allows you to split payments into instalments or delay payment for a set period.

The main payment options offered by Klarna include:

Pay in 30 days: This option allows you to try items before paying, with payment due 30 days after purchase.
Pay in 3 instalments: Your purchase amount is divided into three equal payments, with the first due at checkout and the remaining two spaced 30 days apart.
Financing plans: For larger purchases, Klarna offers longer-term financing options that function more like traditional credit agreements.

It's important to understand that each of these payment options interacts with your credit profile differently. The way you use these services and whether you make timely payments can have varying impacts on your credit score depending on which option you choose.

Does Klarna affect your credit score?

When you use Klarna, the service performs credit checks to assess your eligibility for their payment options. The type of check conducted depends on which payment method you select.

For 'Pay in 30 days' or 'Pay in 3 instalments' options, Klarna typically performs a soft credit check. These soft checks allow Klarna to verify your identity and assess your creditworthiness without leaving a visible footprint on your credit file that other lenders can see. As a result, these soft checks do not directly impact your credit score.

However, for financing plans that spread payments over longer periods, Klarna may perform a hard credit check. Unlike soft checks, hard credit checks are recorded on your credit report and can temporarily lower your score. Multiple hard checks in a short period can signal to lenders that you may be financially stretched, potentially causing a more significant impact on your credit score.

Understanding the difference between these checks is crucial when deciding which Klarna payment option to use. If you're concerned about preserving your credit score, you might want to learn more about how Klarna's various services interact with credit reporting.

How missed payments with Klarna can damage your credit score

While using Klarna responsibly may have minimal impact on your credit score, missed or late payments can cause significant damage. Klarna reports delinquent payments to credit reference agencies, which can negatively affect your creditworthiness.

Payment history is one of the most influential factors in credit scoring models. When you miss a Klarna payment, this information can be reported to credit agencies and remain on your credit report for up to six years. This lengthy reporting period means that a missed payment today could affect your ability to obtain credit in the future.

Even a single missed payment can signal financial instability to potential lenders. This negative mark might result in:

Difficulty getting approved for mortgages, loans, or credit cards
Higher interest rates on future credit products
Reduced credit limits
Fewer options for competitive financial products

These consequences highlight the importance of only using Klarna for purchases you're confident you can repay according to the agreed schedule.

Klarna and credit reporting: what you need to know

In recent years, Klarna has expanded its credit reporting practices. The company now reports payment activity to major credit reference agencies like Experian and TransUnion, making your BNPL behaviour more visible to other lenders.

When you make timely payments on your Klarna purchases, this can help build a positive credit history. Consistently meeting your payment obligations demonstrates responsible credit behaviour, which is viewed favourably by lenders.

Conversely, missed payments will harm your creditworthiness. If you fall behind on payments, Klarna may report this negative information to credit agencies, potentially lowering your credit score.

It's worth noting that Klarna's reporting practices mean that your Buy Now, Pay Later activity is increasingly visible to other financial institutions. This transparency is part of a broader trend in the financial industry to incorporate BNPL data into traditional credit assessments, ensuring lenders have a more complete picture of your financial behaviour.

Does paying Klarna on time help your credit score?

Making timely payments on your Klarna purchases can demonstrate responsible credit behaviour, which may positively influence your credit score over time. This is particularly true for financing plans, which are more likely to be reported as traditional credit accounts.

However, it's important to understand that not all BNPL payments are weighted equally in credit scoring models. Short-term payment options like 'Pay in 30 days' or 'Pay in 3 instalments' may have less impact on improving your score than longer-term financing plans that more closely resemble traditional credit products.

The credit-building potential of Klarna also depends on your overall credit profile. If you have limited credit history, responsibly using Klarna might help establish a pattern of reliable payment behaviour. On the other hand, if you already have a robust credit history, the marginal benefit of on-time Klarna payments may be less significant.

To better understand how Klarna fits into your credit-building strategy, you might want to explore whether Klarna can actually improve your credit score and under what circumstances.

How to fix your credit score after using Klarna

If you've experienced negative impacts on your credit score due to Klarna usage, there are several steps you can take to repair the damage:

Review your credit report: Obtain copies of your credit reports from major credit reference agencies to identify any negative marks related to Klarna payments. This will help you understand the extent of the damage and create a targeted recovery plan.
Focus on timely payments: The most effective way to rebuild your credit history is to make all future payments on time. Set up automatic payments or reminders to ensure you never miss a due date, not just for Klarna but for all your financial obligations.
Reduce overall debt: Work on paying down existing debts to improve your credit utilisation ratio, which is an important factor in credit scoring. Lower debt levels signal financial stability to lenders.
Diversify your credit mix: Consider incorporating other forms of credit into your financial portfolio, such as a secured credit card or a small personal loan that you can confidently repay. A diverse credit mix can positively influence your credit score.
Limit new credit applications: Each hard credit check can temporarily lower your score, so avoid applying for multiple new credit products in a short timeframe.
Consider credit-building tools: Specialised services designed to help rebuild credit can be valuable resources. Explore options that report regular payments to credit agencies to establish a pattern of responsible financial behaviour.

Remember that credit recovery takes time. Most negative marks, including missed Klarna payments, will have less impact on your score as they age, especially if they're outweighed by recent positive payment history.

Tips for using Klarna safely to protect your credit score

To use Klarna responsibly and protect your credit score, consider the following strategies:

Only purchase what you can afford: The most important rule for using any BNPL service is to only make purchases you can comfortably repay within the agreed timeframe. Before completing a purchase, consider whether the payment schedule aligns with your expected cash flow.
Set payment reminders: Mark payment due dates in your calendar, set alerts on your phone, or enable Klarna's notification features to avoid missing instalments. Even a one-day delay can potentially be reported as a late payment.
Understand different payment options: Be aware of which Klarna payment method you're selecting and whether it involves a soft or hard credit check. Choose options that align with your credit management goals.
Monitor your account regularly: Check your Klarna account frequently to track upcoming payments and ensure your payment method information is up to date.
Limit the number of active Klarna agreements: Having too many ongoing BNPL agreements simultaneously can make it difficult to keep track of payments and may strain your budget.
Build an emergency fund: Maintain a financial buffer to ensure you can cover Klarna payments even if unexpected expenses arise.
Regularly check your credit report: Monitor your credit report to verify that your Klarna activity is being reported accurately and to quickly identify any potential issues.

For more comprehensive information about using Klarna safely and responsibly, explore our detailed guide on Klarna safety and best practices.

The future of BNPL and credit reporting

The relationship between Buy Now, Pay Later services like Klarna and credit reporting is evolving. As regulatory scrutiny increases, BNPL providers are moving toward more comprehensive credit reporting practices. This means that your Klarna usage is likely to have an increasingly significant impact on your credit profile in the future.

Understanding this changing landscape is crucial for managing your financial reputation effectively. By using Klarna responsibly—making purchases you can afford and ensuring timely payments—you can enjoy the convenience of BNPL services without risking damage to your credit score.

Rather than wondering "has Klarna ruined my credit score?" after encountering problems, take a proactive approach by understanding how these services work and implementing strategies to protect your creditworthiness from the start. With careful management, Klarna can be a useful financial tool rather than a threat to your credit health.