In recent years, India has witnessed a surge in the popularity of Buy Now, Pay Later (BNPL) services. From e-commerce giants like Amazon and Flipkart to fintech platforms like LazyPay, Simpl, and ZestMoney, BNPL is being marketed as an easy, interest-free way to shop and split payments. But as its use grows, many consumers are asking a crucial question:
Is BNPL affecting my credit score?
In this in-depth guide, we’ll explain:
- What BNPL is
- How it works
- Whether it affects your CIBIL score
- How to use it wisely in 2025
- Pros, cons, and comparison with credit cards
✅ What is BNPL?
Buy Now, Pay Later (BNPL) is a short-term credit facility offered at the point of purchase (online or offline), allowing you to buy products or services instantly and pay later in interest-free EMIs or after a few weeks.
BNPL providers typically partner with merchants and give users instant credit approval with minimal documentation.
Popular BNPL Apps in India (2025):
- LazyPay
- ZestMoney
- Amazon Pay Later
- Flipkart Pay Later
- Paytm Postpaid
- Simpl
- OlaMoney Postpaid
🔍 How Does BNPL Work?
Here’s how a BNPL transaction typically works:
- You shop online or offline.
- At checkout, you choose BNPL instead of debit/credit card.
- The BNPL provider pays the merchant instantly.
- You repay the BNPL provider later, usually:
- In one payment after 15–30 days, or
- In 3–12 EMIs (may be interest-free or with nominal interest)
📉 Does BNPL Affect Your Credit Score?
✅ Yes, BNPL can affect your CIBIL or credit score in India, both positively and negatively, depending on how you use it.
Here’s how:
| BNPL Factor | Impact on Credit Score |
|---|---|
| On-time repayment | Positive impact – builds good credit history |
| Missed/late payments | Negative impact – reduces CIBIL score |
| High BNPL usage (credit exposure) | Can lower your score due to credit overuse |
| BNPL account closure | May affect credit age (slight negative impact) |
| Multiple BNPL accounts | More hard inquiries can reduce score temporarily |
Real-time Example:
- Suppose you use ZestMoney for ₹15,000 in 3 EMIs.
- ZestMoney reports your usage and repayment behavior to CIBIL/Experian.
- If you repay on time – your score may improve by 10–25 points.
- If you default or delay – your score may drop by 50–100 points.
🧾 How Credit Bureaus in India Track BNPL (2025 Update)
Since 2023, RBI has mandated BNPL companies to treat BNPL as credit and report it to credit bureaus like:
- CIBIL (TransUnion)
- Equifax
- Experian
- CRIF Highmark
So yes, in 2025, BNPL is just like a mini loan, and is fully visible in your credit report.
🆚 BNPL vs Credit Card – Impact on Credit Score
| Feature | BNPL | Credit Card |
|---|---|---|
| Type of Credit | Short-term, small-ticket loan | Revolving credit |
| Credit Report Visibility | Yes (mandatory since 2023) | Yes |
| Effect on CIBIL Score | Moderate | High |
| Flexibility in Repayment | Limited (fixed EMIs) | Flexible (minimum due to full) |
| Late Payment Penalty | ₹250–₹500 + GST | 3%–4% monthly interest + penalties |
| Credit Utilization Ratio | Not considered (non-revolving) | Considered |
| Building Long-Term Credit Score | Slow | Faster |
✅ Tip: For long-term CIBIL improvement, a credit card is better. But for beginners, BNPL can be a stepping stone.
🎯 How to Use BNPL Without Hurting Your Credit Score
- Repay on time – Always clear dues before the due date.
- Keep track of BNPL limits – Don’t overuse multiple BNPL apps.
- Limit active BNPL accounts – Too many accounts signal credit-hunger.
- Don’t rely on BNPL for big purchases – It’s best for < ₹10,000 spends.
- Set auto-debit mandates – Avoid missing payments due to forgetfulness.
📊 Pros & Cons of BNPL for Credit Health
| Pros | Cons |
|---|---|
| Easy approval without strong credit history | Can lead to over-spending |
| Helps build credit score (if repaid on time) | Delays/lapses hurt credit badly |
| Ideal for students & new job holders | Reporting to CIBIL now mandatory (affects loan future) |
| Interest-free in many cases (0% EMI) | Late fees and charges are high |
🧠 Expert Advice: Should You Use BNPL in 2025?
BNPL is a great tool for disciplined users but a trap for impulse buyers.
If you’re building your credit score, BNPL can help — provided you:
- Use only 1 or 2 BNPL apps
- Borrow small amounts (₹5,000–₹15,000)
- Repay on time every single month
However, if you’re planning to take:
- Home loan
- Car loan
- Education loan
…within the next 12–24 months, avoid using multiple BNPL apps, as it may lower your creditworthiness in lenders’ eyes.
🔚 Conclusion
Yes, BNPL does affect your credit score in India as of 2025.
It’s no longer an “invisible” form of credit. Every transaction, EMI, and delay is reported to credit bureaus — and can boost or hurt your CIBIL score depending on your behavior.
✅ Use BNPL responsibly, for small-ticket items.
❌ Don’t treat it as free money — it’s a short-term loan with consequences.
📣 Have you checked your credit report lately?
You can get one free CIBIL report every year from cibil.com. Make sure your BNPL records are accurate.
