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Does Affirm Affect Your Credit Score?

Jessica Martel

Oct 26, 2021 6 min read

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How Affirm and Paybright impact your credit score
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    Affirm is a fintech company that offers buy now, pay later (BNPL) installment loans to consumers. In January 2021, Affirm acquired Paybright, one of Canada’s leading BNPL plans. Now, Affirm Paybright is gaining in popularity among Canadian consumers with over 7,000 domestic and international retailer partnerships. 

    Using Affirm as a payment option may affect your credit score depending on the plan you choose. A soft credit check is required to prequalify for all Affirm loans and will not affect your credit score. The same is true if you sign up for the ‘Pay in 4’ installment plan. However, an instant hard credit check is performed when you use an Affirm ‘Pay Monthly’ plan. Unlike soft credit checks, hard credit checks do impact your credit score. 

    Affirm’s “Pay in 4” installment plan does not impact your credit score, while their “Pay Monthly” plan may impact your credit score.

    How Does Affirm Work?

    Across North America, millions of stores accept Affirm as a payment method, allowing you to break up the cost of a purchase into a series of biweekly or monthly installments. Affirm offers two main installment plans:

    • Pay in 4

    • Pay Monthly

    Pay in 4

    The Pay in 4 plan is primarily built for small purchases. The minimum purchase size is set by each retailer and is typically around $50. Purchase maximums are usually under $1,000. 

    This plan requires you to make four interest-free bi-weekly payments, with the first installment due at checkout. The remaining payments are debited bi-weekly (every two weeks) over the following six weeks. The Pay in 4 plan comes with no interest payments or fees, will not impact your credit score, and allows you to set up automatic payments. 

    Pay Monthly 

    The Pay Monthly plan is best suited for larger purchases. Retailers are responsible for setting their minimum purchase amounts but it's usually around $300. Affirm does not list a maximum purchase amount though when you go to prequalify for an instant loan, Affirm gives a range of $300 to $15,000. 

    Monthly payments are spread out over a six to 60-month time period. Plans start at 0% interest and go up to 29.95% (higher than the APR on most credit cards). When you apply for a monthly plan, you will be subject to a hard credit check which can impact your credit score. 

    What does the Affirm Process Look Like?

    The process for using an Affirm loan is simple. 

    1. Shop your favourite stores, including Apple, Sephora, or Oakley. When you are ready to check out, select Affirm as your payment option of choice.   

    2. Use your mobile phone to enter some personal information and then select the payment plan that works for you. Affirm will outline all of the loan terms including APR, interest charges, your installment payments, and the total loan amount.

    3. If you qualify for the payment plan, you can confirm and make your purchase. 

    What Credit Score Is Needed to Use Affirm?

    Affirm does not list a minimum credit score to qualify for an Affirm loan. However, if you apply for an Affirm loan and don’t get approved, you might not be completely out of luck. Affirm Canada uses a third-party partner company called Easyfinancial, which offers loans to those with less than stellar credit. 

    What Are The Pros and Cons of Using Affirm?

    Here are the pros and cons of using affirm as a buy now, pay later option.

    Pros

    • Offers two payment models: Pay in 4, Pay Monthly

    • Network of over 7,000 retail partners 

    • 0% interest finance available

    • No late payment fees

    • Pre-qualification is available 

    • Can take on multiple loans at one time

    Cons

    • On-time payments are not reported to credit bureaus (can’t help to improve your credit)

    • Hard credit check is required for Pay Monthly plans, and can impact your credit score

    • Interest rates as high as 29.95%, higher than most credit cards

    • Not all retailers offer Affirm as a payment option

    • Late and non-payments may be reported to a credit bureau  

    Is There an Interest Charged by Affirm?

    Whether or not you are charged interest depends on where you make your purchase. It is up to the retail partner to determine the specific interest rate, which can range between 0% and 29.95% APR (Annual Percentage Rate). Affirm will always calculate and show you your exact APR and total cost of borrowing before you finalize your transaction. 

    Some Affirm plans also charge a small monthly processing fee with each payment. Affirm does not charge any other service fees, prepayment fees, or late fees. However, if you miss a payment, you won’t be able to use the service for future payments. 

    If you stop making your payments, Affirm may “charge off” your purchase. This doesn’t mean you are off the hook. It means Affirm will close your account and possibly transfer it to a collection agency -- not great news for your credit score. Legally, you will still be obligated to pay your debt. So, if you’re going to be late on a payment, reach out to Affirm to let them know as soon as possible. 

    Do You Need to Have a Credit Card to Apply for Affirm Credit?

    Having a Canadian Visa or Mastercard credit or debit card is required to use Affirm Paybright. To use a debit card, it must have the Visa or Mastercard logo. Prepaid credit cards are not accepted.  

    Does Affirm Have Any Credit Limit in Place?

    Affirm does not list a maximum credit limit. The spending limit you are eligible for depends on the specific retailer you apply to. To provide customers with the highest spending limit possible, Affirm uses an algorithm that examines many factors including:

    • Credit score

    • Credit history

    • How long you’ve had an Affirm account

    • Repayment history with Affirm

    Where Can I Use Affirm to Purchase?

    Affirm currently has partnerships with over 7,000 domestic and international retailers including, Hudson’s Bay, Apple, Casper, Steve Madden, Sephora, eBay, Wayfair, Samsung, Endy, and more. You can use Affirm to make online purchases as well as in-store purchases. 

    How Do Returns & Refunds Work With Affirm?

    All returns and refunds are subject to the merchant’s return and refund policies. If you want to return an item or get a refund, you will have to reach out to the store, not Affirm. 

    If you and the merchant agree to a return or refund, then Affirm will go ahead and process the request. If a refund or cancellation is for the entire amount of the loan you borrowed, you might still be on the hook to pay a credit/cost of borrowing charge.  

    Is It Worth Using Affirm?

    An Affirm BNPL plan can be a convenient way to break up payments for larger purchases. A better course of action is to save up the entire sum of money and then buy the product flat out. This way, you won’t have to pay any interest and there’s no chance you will be late on your payment. 

    If you choose to use a BNPL plan make sure you understand the pros and cons associated. Also review the specific terms of your plan, as different merchants will have different terms. 

    Before you use a BNPL plan, consider how you’ll feel about paying for something you buy today, two weeks, two months, or 24-months down the line. Ultimately the decision is up to you however, you can use the following points as a guide. 

    Affirm may be a good option if:

    • You get a no-interest loan

    • You need money to cover a large expense

    • You don’t meet the requirements for a credit card

    Affirm may be a bad option if: 

    • You have trouble tracking your spending

    • You want to build your credit

    • You’re constantly making late payments

    Jessica Martel
    Jessica Martel

    Jessica Martel is a writer with over 10 years of experience covering personal finance and financial literacy. Her work has appeared on websites such as Investopedia, The Balance, Money Under 30, Scotiabank, and more. Jessica has a Master of Science degree in Cognitive Research Psychology.

    Article Contents

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