Let’s be honest. Buy Now Pay Later (BNPL) feels like a cheat code. You want something today, but you don’t want to pay today. So you tap one button, the app says:
“₹0 payment today. Pay after 15 days.”
No paperwork. No bank visit. No “loan” word. No stress.
And that’s exactly where the danger starts.
Because in India, BNPL isn’t just a convenience feature. In most cases, it’s a loan in disguise. And when you miss even one small BNPL payment (even ₹199), it can quietly hit your credit report and lower your CIBIL score.
In this blog, I’ll explain the real truth behind BNPL, how it affects your credit score, why it becomes a trap for many Indians, and what you can do to protect yourself legally and financially.
What is BNPL (Buy Now Pay Later) in India?
BNPL is a short-term credit facility offered through apps or platforms where you buy something now and pay later, either in one shot or in small EMIs.
Common examples where BNPL is pushed aggressively:
- E-commerce (shopping apps)
- Food delivery apps
- Travel bookings
- Education subscriptions
- Mobile recharge and bill payments
The marketing makes BNPL look like a harmless “pay later” option. But legally and financially, in many cases, it functions as:
- a personal loan, or
- a credit line, or
- a lending product issued by a partner NBFC/bank
And yes, lending products are connected to your credit history.
Here’s the Brutal Truth: BNPL Can Damage Your Credit Score
Many users believe:
“BNPL is not a loan, so it won’t affect my CIBIL.”
That belief is expensive.
Because most BNPL providers either directly or indirectly report your payment behaviour to credit bureaus like:
- CIBIL
- Experian
- Equifax
- CRIF High Mark
This means: BNPL affects CIBIL score the same way loans/credit cards do, especially when you delay or miss payments.
How BNPL Hits Your Credit Score (Step-by-Step)
1) You accept BNPL terms without reading them
Most people just click “Agree”. But hidden inside the terms is usually something like:
- “This is a credit facility offered through a lending partner.”
- “Repayment behaviour may be reported to credit bureaus.”
So the moment you use BNPL, it may create a credit relationship in your name.
2) Your “Pay Later” becomes an active loan entry
In many BNPL arrangements, a new entry appears in your credit report as:
- Consumer loan
- Short-term personal loan
- Credit line
- Pay later account
Even if the amount is small, the record matters.
3) One missed date becomes a long-term problem
BNPL is brutal because it’s designed around small deadlines.
If you miss the due date:
- Late fees are charged
- Interest may be added
- Collection calls may start
- Negative credit reporting may happen
And the worst part? Many people realise the damage only when:
- The home loan is rejected
- Car loan interest becomes high
- Credit card application declines
Why BNPL Is Dangerous for Young Indians (Especially First-Time Credit Users)
If you are under 30 or a student / first-job earner, BNPL is risky because:
- You don’t have a strong credit history yet
- Your credit score is sensitive to even one late payment
- BNPL makes spending addictive
BNPL feels like “free money” and trains your brain to spend first and think later. That habit is exactly how debt starts.
“But I only missed ₹300.” Why Even Small BNPL Defaults Matter
Let me make it simple:
Credit bureaus don’t care whether you missed ₹300 or ₹3 lakh. They care about the fact that you missed a credit repayment.
Even one delayed BNPL payment can show up as:
- DPD (Days Past Due)
- late payment marker
- settled/written off tag (in worst cases)
Those are silent killers. They don’t harm you today; they harm you when you apply for something important.
BNPL vs Credit Card: What’s More Dangerous?
Ironically, a credit card is often safer than BNPL if used correctly. Why? Because credit cards are transparent.
BNPL is marketed like:
“It’s not credit, it’s convenience.”
But the credit reporting consequences are real.
Also, BNPL providers sometimes:
- Give very short repayment windows (7–30 days)
- Apply harsh penalties quickly
- Start recovery calls early
Legal Angle: Can BNPL Companies Harass You?
Now the uncomfortable question:
“What if I don’t pay BNPL? Can they harass me like loan apps?”
BNPL providers and their collection partners must follow RBI guidelines and debt recovery norms. But in reality, complaints exist where:
- Customers receive repeated calls
- Family members are contacted
- Threatening language is used
If harassment happens, it can attract legal action under:
- consumer protection laws (deficiency/unfair practice)
- IT Act / cyber harassment route
- criminal intimidation provisions (in extreme cases)
You don’t have to tolerate unlawful recovery behaviour.
How to Protect Yourself from BNPL Credit Score Damage
1) Treat BNPL like a loan (because it is)
If you can’t pay it today, don’t buy it today.
2) Track due dates manually
Do not trust app reminders. Set your own calendar reminder.
3) Avoid multiple BNPL apps
Multiple small BNPL loans look messy on a credit report.
4) Check your credit report every 2–3 months
Use trusted platforms. Watch for unknown “consumer loan” entries.
5) If wrongly reported, dispute it immediately
If your repayment was on time but the report shows a delay, you can file a dispute with the bureau.
What To Do If BNPL Already Ruined Your Credit Score
If your credit score is already impacted:
- Pay all pending dues immediately
- Request closure confirmation (email proof)
- Ask the lender to update the bureaus
- File a credit report dispute if errors exist
A credit score can recover, but it takes months. So don’t ignore it.
BNPL Isn’t Evil, But It’s Not Innocent Either
BNPL is not “bad”. But it becomes dangerous when people treat it like a discount coupon instead of a debt.
In India, where financial literacy is still growing, BNPL is quietly creating a generation of people with damaged credit history even before they apply for their first home loan.
So yes, BNPL can destroy your credit score. Not because you are irresponsible. But it is designed to be effortless.
And effortless debt is the easiest kind to fall into.
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Disclaimer:
This article is published for general legal awareness and informational purposes only, and should not be construed as legal advice or a solicitation to act.
About the Author:
Joginder Poswal is an advocate enrolled with the Bar and practising law, specialising in cyber law, criminal law, and corporate compliance.
For more information, please refer to the contact details provided on this website.