Francis Creighton, president and chief executive officer of the Consumer Data Industry Association, a trade group for the credit reporting industry, says it’s important to have postpaid loans reflected in the newspaper. credit report so that lenders can get a true picture of the applicant’s credit profile as a whole. But because the loans are structured differently from traditional loans, he said, credit bureaus must first deal with “technical” problems in order to add them. “We have to make sure we do it right,” he said.
At the same time, the federal Consumer Financial Protection Bureau has stepped up scrutiny of postpaid companies. In mid-December, the bureau opened an investigationAsk the five companies to provide detailed information about business practice before March 1. The agency, citing the “explosive growth” of postpaid during the pandemic and through the holiday shopping season, said it wanted to better understand the potential benefits and risks for with consumers. The agency said it was also concerned about how companies use the data they collect from customers.
The agency notes that if consumers use loans to make multiple purchases, they may have difficulty tracking payments. “Due to the ease of obtaining these loans,” consumers may spend more than expected, the agency said.
Installments are often automatically deducted from a debit card, so shoppers may be charged an overdraft fee if they don’t have enough funds in their account to cover it. If shoppers pay in installments with a credit card, they may have to pay additional debt and interest fees on their card if they don’t pay their installment balance in full.
In addition, the consumer agency said, postpaid loans have fewer protections than traditional credit cards, such as the right to dispute a charge if the product is defective.
Members of the Conference, as consumer grouphas called for more scrutiny of companies, noting that because installment loans don’t use traditional credit checks, it’s unclear if borrowers can afford to pay off multiple loans.
Here are some questions and answers about buy now, pay later:
What should I consider before using postpaid loans?
Ms. Saunders said consumers should be confident they will be able to make their required installment payments within the allotted time. With a traditional credit card, the customer has a consistent payment schedule and a statement that summarizes all fees, but someone with multiple postpaid loans may have to schedule multiple due dates. “They definitely want to make sure they’re tracking their payments,” she said.
https://www.nytimes.com/2021/12/31/your-money/buy-now-pay-later-loans-credit.html ‘Buy Now, Pay Later’ Loans Might Soon Play a Bigger Role in Credit Score