Does Klarna Report to Credit Bureaus and Impact Your Credit Score?

Does Klarna Report to Credit Bureaus and Impact Your Credit Score?

In recent years, the financial services industry has seen a surge in the popularity of buy now, pay later (BNPL) services. One of the leading companies in this space is Klarna, a Swedish fintech firm that offers consumers an alternative to traditional credit cards and loans. This article will explore Klarna's business model, how it works, and whether it reports to credit bureaus and impacts your credit score. By the end, you should have a better understanding of how using Klarna can affect your financial health.

Understanding Klarna's Business Model

Klarna operates by partnering with retailers to offer consumers flexible financing options at the point of sale. This allows shoppers to spread the cost of their purchases over several interest-free installments or defer payment for a short period. Klarna makes money by charging merchants a fee for each transaction processed through its platform, while also earning interest on late payments from customers.

The company's primary goal is to make the online shopping experience smoother and more convenient. By providing a simple and transparent payment solution, Klarna has attracted millions of users worldwide. However, many consumers might be wondering how using Klarna can affect their credit score and whether the company reports to credit bureaus.

How Does Klarna Work?

When shopping online, customers who choose Klarna as their payment method are typically presented with three options: Pay Later, Pay in 3 or 4 installments, and Financing. Pay Later allows customers to defer payment for 14 or 30 days, while Pay in 3 or 4 installments splits the purchase into equal, interest-free payments. Financing, on the other hand, lets customers pay for their purchase over a more extended period, usually with interest.

To use Klarna, customers must provide their name, address, email, and mobile number. The company then performs a soft credit check to determine if the customer is eligible for the selected payment option. Once approved, the customer can proceed with their purchase and manage their Klarna account through the company's app or website.

Does Klarna Report to Credit Bureaus?

One of the most commonly asked questions regarding Klarna is whether it reports to credit bureaus. In general, Klarna does not report to credit bureaus for its Pay Later or Pay in 3 or 4 installments options. This means that timely payments with these plans will not positively impact your credit score, and late payments will not typically harm it either.

However, Klarna's Financing option is different. Financing may involve reporting to credit bureaus, as it is a form of a credit agreement. Klarna may report your account's activity to credit bureaus, which could impact your credit score, both positively and negatively, depending on your repayment behavior.

Does Klarna Affect Your Credit Score?

As mentioned earlier, using Klarna's Pay Later or Pay in 3 or 4 installments options should not impact your credit score, as the company generally does not report these transactions to credit bureaus. However, when applying for a Klarna payment plan, the company performs a soft credit check, which has no impact on your credit score.

On the other hand, Klarna's Financing option may affect your credit score. If you fail to make timely payments or default on your financing agreement, Klarna may report this to credit bureaus, negatively impacting your credit score. Conversely, making all your payments on time could result in a positive effect on your credit score.

Factors Affecting Your Credit Score

While Klarna's Pay Later and Pay in 3 or 4 installments options may not directly impact your credit score, it's essential to understand the factors that do. Your credit score is determined by factors such as your payment history, credit utilization, length of credit history, types of credit, and recent credit inquiries. Maintaining a good credit score is crucial for securing loans, mortgages, and favorable interest rates on credit cards.

To protect your credit score, it's crucial to make timely payments on all your credit accounts, maintain low credit utilization, and avoid applying for multiple credit accounts within a short period.

How Klarna Checks Credit

When applying for a Klarna payment plan, the company conducts a soft credit check to assess your eligibility. This check does not impact your credit score and is not visible to other lenders. Klarna uses the information you provide, such as your name, address, and financial history, to determine if you qualify for the selected payment option.

In some cases, Klarna may require additional information or perform a hard credit check when applying for the Financing option. A hard credit check can temporarily lower your credit score and is visible to other lenders, who may consider it when assessing your creditworthiness.

Managing Your Klarna Account Responsibly

To use Klarna responsibly, it's essential to make timely payments and avoid accumulating debt. Keep track of your payment due dates by setting reminders or using the Klarna app, which offers notifications regarding upcoming payments. If you're struggling to make a payment, reach out to Klarna's customer support team to discuss possible solutions or payment adjustments.

Additionally, be mindful of your overall financial health and only use Klarna's services if you're confident you can repay your purchases within the agreed-upon timeframe. While Klarna's Pay Later and Pay in 3 or 4 installments options may not directly impact your credit score, irresponsible use of credit can lead to financial difficulties and harm your creditworthiness.

Alternatives to Klarna for Financing Purchases

If you're looking for alternatives to Klarna, there are several other financing options available. Some popular BNPL services include Affirm, Afterpay, and PayPal Credit. These companies offer similar payment plans and can be found at various online retailers.

Alternatively, you can consider traditional credit cards, which offer rewards, cash back, or points for purchases. If managed responsibly, credit cards can help you build a strong credit history and improve your credit score.


In conclusion, Klarna's Pay Later and Pay in 3 or 4 installments options generally do not report to credit bureaus or impact your credit score. However, the company's Financing option may affect your credit score, depending on your repayment behaviour. To use Klarna responsibly, ensure that you make timely payments and only take on debt you can comfortably repay. By doing so, you can enjoy the convenience of Klarna's services without jeopardizing your financial health.