Credit Score Basics > Does Clearpay affect your credit score?

Does Clearpay affect your credit score?

Wollit Team2 minute read · Updated 29th June 2024

Clearpay is a “buy now pay later” service that allows customers to pay for their purchases in 4 interest-free instalments over 6 weeks. Technically, using Clearpay does not directly affect or help your credit score. However, if you miss repayments or completely fail to pay back what you owe, it might sometimes impact your credit.

How does Clearpay work?

Here are a few things you need to know about using Clearpay:

While you have six weeks to pay for your purchase, the first payment is upfront.
Each instalment is due every 2 weeks.
If you pay on time, then the service is completely free.
However, Clearpay charges a £6 late fee for each late instalment and a further £6 if it’s still unpaid 7 days later. The late fee can go up to £24 for orders over £24.
If you miss a payment, you might not be able to use Clearpay again. They could also pass this unpaid debt to a debt collection agency.

How does Clearpay affect my credit score?

Clearpay does not directly affect your credit scores as it does not share your data with any of the leading credit reference agencies (Experian, Equifax, or TransUnion).

This means that if you make repayments on time, great, but they won’t improve your credit score. You can’t use Clearpay as a credit-building tool.

The fact that Clearpay does not report data to credit agencies also means that if you miss payments, your credit score won't be immediately hurt. You’ll have to pay late fees, but no credit reference agency will know.

Clearpay also does not run a hard credit check when you sign up for it. It doesn’t look at your credit history to see if you’ve repaid other debts and doesn’t care what your credit score is.

This also means that Clearpay doesn’t check if you can afford it when you use it to buy a product, which can increase the risk of you missing a payment if you miscalculate how much you can afford.

Most of the time, Clearpay will remind you what you must pay and leave it at that. You’ll incur late fees and might have your account closed, but your credit score is still safe for the time being.

However, if your debt is substantial, Clearpay might pass it on to a debt collection agency. And this can hurt your credit score – debt collection agencies report to the credit reference agencies.

In short, Clearpay itself doesn’t hurt or improve your credit score. As long as you don’t have to deal with a debt collection agency on your behalf, your credit score is safe if you make a late payment to Clearpay.

Finally, if you consider using Clearpay as a credit-building tool, you can’t. But there are other tools you can use to improve your credit history. One such product is Wollit.

Wollit is a 12-month credit-building plan in which you pay a monthly fee, which Wollit then reports as a loan repayment to the major credit agencies (Experian, Equifax, TransUnion). Unlike a “buy now, pay later” service, this actually helps build your credit history, the main factor that goes into calculating your credit score.