Declined for buy now, pay later? Here's what you need to know

Buy now, pay later is a type of credit that allows you to spread the cost of a purchase over several instalments, often in three or four payments. 

It's used for everything from clothing and electronics to holidays, festival tickets and takeaways. 

If you make all your repayments on time, you won't usually pay any interest or fees. But if you miss payments, you could face late charges and, in some cases, it may affect your credit record.

The government has introduced new regulations because of growing concerns that some people were taking on more credit than they could comfortably afford.

The new rules are intended to give customers greater protection while helping prevent people from borrowing beyond their means. 

BNPL providers are now regulated by the Financial Conduct Authority (FCA). 

Before approving your application, lenders must carry out affordability checks to assess whether the repayments are manageable based on your financial circumstances. 

The changes also mean you'll benefit from: 

• better protection if you experience financial difficulties  
• clearer information about how the agreement works before you sign up  
• access to the Financial Ombudsman Service if you're unhappy with how a complaint has been handled 

Being declined doesn't necessarily mean you've done anything wrong or that you have a poor credit history. 

Many people who have always paid on time may now be declined because lenders must consider a much wider picture of your finances. 

Some reasons could include:

Your finances don't meet the affordability assessment 

Lenders now look at whether your income comfortably covers your regular spending and existing financial commitments. 

You already have several BNPL agreements 

Even if you've never missed a payment, having multiple active BNPL purchases may affect the lender’s assessment of whether taking on more borrowing is affordable.  

Recent missed payments 

Late or missed payments on loans, credit cards or other credit agreements can affect the lender's decision. 

Your spending limit has been reached 

Some providers set individual spending limits that can change over time based on your circumstances. 

Technical or account issues 

Occasionally, applications can be declined because of incomplete information, identity verification issues or temporary technical problems.

When you apply for BNPL, providers must provide a proportionate affordability check before approving customers. As part of those checks, they’ll carry out a ‘soft’ credit check, or, in some cases, a hard credit check.  

Most short-term BNPL products, which you pay back in three or four instalments over a few weeks or months, typically use a soft check. Unlike a hard credit check, a soft check provides only a surface-level snapshot of your financial history. It doesn't leave a mark on your credit file or affect your credit score. 

But some longer-term BNPL agreements, usually those lasting 12 months or more, may involve a hard credit check, which is recorded on your credit file and can have an impact on your credit score.  

Having lots of hard searches in a short space of time could indicate to potential lenders that you're relying heavily on credit and you might be a higher risk. 

Being declined can feel disappointing, especially if you've used BNPL before. However, it's worth taking a moment before looking for other ways to borrow. 

Here are some practical steps you can take: 

Don't keep making multiple applications 

Applying repeatedly with different BNPL providers in a short space of time may not improve your chances and could make lenders more wary.  

Know before you borrow  

Before you borrow, make sure it works for your finances. Use our free budget calculator to take a look at your monthly income and essential spending to see whether the purchase is affordable without borrowing.  

Review your existing BNPL commitments 

If you already have outstanding BNPL balances, paying some of these down may improve your chances in the future. 

Check your credit report 

Although BNPL affordability checks don't rely solely on your credit score, it's worth checking your credit report for errors or unexpected information. 

Consider whether the purchase is essential 

Your circumstances may change over time. If your application has been declined, take a moment to consider whether the purchase is truly essential. Ask yourself if it's something you need right now or if it could wait until your financial situation improves. 

Avoid high-cost borrowing 

If you're declined for BNPL, be very cautious about turning to expensive alternatives such as payday loans.

If being declined means you're finding it difficult to pay for essential items or cover everyday living costs, it may be a sign that your finances are under pressure. 

Free, confidential debt advice is available, and getting help early can often prevent problems from becoming more serious. 

The new BNPL rules are intended to make borrowing safer, not harder. While more people may be declined than in the past, the aim is to help prevent unaffordable debt and ensure credit is only offered when repayments are likely to be manageable. 

If you're declined, it doesn't necessarily reflect your financial responsibility. It simply means the lender has decided, based on the information available, that lending may not be affordable at this time. 

Taking a little time to review your finances and understand the decision can help you make the best choice for your longer-term financial wellbeing.