Affirm has roughly 17 million active consumers as of September 2023. And since Affirm doesn’t charge any late fees, its users have cumulatively avoided paying $231 million worth of late fees from July 2016 to June 2023.
While Affirm doesn’t charge its users late fees, late payments are still reported to Experian. This may come as a surprise to a lot of people since BNPL providers have earned a reputation for not furnishing data to the credit bureaus. However, Affirm and other BNPL providers like Sezzle have started reporting to the credit bureaus.
Despite this development, the way BNPL providers report credit information is still shrouded in mystery. So let’s clear the air and find out how exactly Affirm affects your credit score.
Can I Build Credit with Affirm?
Yes, it’s possible to build credit with your Affirm purchases but only with the use of third-party apps like Cushion. At the time of writing, using third-party apps is necessary because Affirm only reports your first monthly installment loan to Experian.
All succeeding monthly installment loans after that will go unreported unless they become 30 days overdue. This means that Affirm can only affect your credit score negatively without the use of apps like Cushion.
It’s important to note that most BNPL providers have plans to continue developing the way they report to the credit bureaus. In Affirm’s case, they plan to report to TransUnion and Equifax eventually. They could also release new products that would require regular data furnishing.
Luckily, there’s a way to check if your loan’s repayment history is being reported to the credit bureaus:
- Open the Affirm App.
- Select ‘Manage’
- Select a Loan
- Select ‘Details’
- Select ‘Loan terms’
Will Late Affirm Payments Affect My Credit?
As mentioned above, once a monthly installment loan becomes 30 days overdue, that loan’s entire payment history will be reported to Experian. This will undoubtedly affect your credit score negatively. However, it is unclear whether this is the same case with Affirm’s Pay in 4 loans. Despite the lack of clarity, it’s best to avoid making late payments in general even if Affirm doesn’t charge late fees.
Does Affirm Perform Credit Checks?
Affirm performs a soft credit check when you first make an account. Applying for a pay-in-4 loan will not trigger additional credit checks.
Applying for a monthly loan or a savings account, however, will subject you to additional credit checks. Affirm does not clarify whether these are soft or hard credit checks.
Affirm reports the payment history of your first monthly installment loan to Experian. Succeeding monthly installment loans will go unreported unless you start making late payments.
Applying for monthly installment loans can also affect your credit score negatively through hard credit inquiries. This means that, at the time of writing, Affirm can affect your credit score negatively should you start making late payments or apply for too many monthly loans. And that building credit history with Affirm can only be done with apps like Cushion.