Does Affirm Affect Credit Score

Affirm is a buy now, pay later (BNPL) service that allows consumers to split purchases into installments. When a consumer applies for an Affirm loan, Affirm may perform a soft credit check. A soft credit check, also called a soft inquiry, occurs when a company checks a consumer's credit file for prequalification or account review. Soft inquiries are not visible to other lenders and do not affect credit scores. However, Affirm's impact on credit scores depends on the specific product. For some products, such as the Affirm Card or monthly installment loans, Affirm may report the account to national credit reporting companies.

Not all buy now, pay later providers report to credit reporting companies. Historically, many BNPL services did not report loan activity at all. In recent years, some providers have begun reporting certain loans. Affirm has stated that it reports certain loans to credit reporting companies, though not all transactions are reported. When Affirm reports a loan, it may report the account's payment history. Payment history is a major factor in credit scoring models. That means on-time payments and late payments can appear in a consumer's credit file and can influence credit scores.

A soft credit check does not affect credit scores. This is because soft inquiries are only visible to the consumer and are not shared with other lenders. In contrast, a hard credit check, also called a hard inquiry, occurs when a consumer applies for credit and a lender reviews the consumer's full credit report. Hard inquiries can affect credit scores, though their impact is usually small. Affirm typically uses soft credit checks for prequalification. However, if a consumer accepts a loan offer and Affirm reports the loan, the resulting account becomes part of the consumer's credit history.

Whether a specific Affirm purchase affects credit scores depends on the product and Affirm's reporting practices. Affirm's Pay in 4 product, which splits a purchase into four interest-free installments, may not be reported to credit reporting companies. Monthly installment loans, such as those with longer terms, may be reported. Reporting practices can change over time. Consumers can obtain free credit reports from the national credit reporting companies to see whether an Affirm account appears. Under the Fair Credit Reporting Act, consumers are entitled to free credit reports from annualcreditreport.com.