“Buy Now, Pay Later” (BNPL) services—offered by companies like Affirm, Klarna, Afterpay, and PayPal—have exploded in popularity over the past few years. They allow consumers to make purchases and pay for them over time in smaller installments, often interest-free if paid on time. For many shoppers, BNPL is a convenient and flexible alternative to credit cards.

However, as their use becomes more widespread, BNPL loans are starting to factor into credit scores, bringing both opportunities and risks for consumers.