Does Flexiti Affect Your Credit Score?

Flexiti is a leading provider of buy now, pay later (BNPL) payment solutions. The company is one of the country’s fastest-growing point-of-sale lenders. It offers cardholders 0% interest financing (though there are admin fees and other possible charges) at select retailers across the country, including merchants that sell items like furniture, appliances, electronics and more. 

Through its BNPL platform, customers can apply (only through a participating retailer’s website) for a FlexitiCard® and be instantly approved. Once approved, you can then use your card to shop online or in-store to make multiple purchases at participating retailers. 

While buying now and paying later may sound like an easy way to shop, it’s crucial to understand how Flexiti affects your credit score.

Firstly, when you apply for credit with Flexiti, they will check your credit score, which will appear on your credit report as a 'credit inquiry'. Credit inquiries can have a small negative effect on your credit score, so we usually advise that people avoid making too many applications for credit in a short space of time.

Secondly, it's important to note that Flexiti will not report your credit account with them or the payments you make on your credit report. The downside to this is that you won't get the benefits of boosting your credit score or building your credit history with the payments you make to Flexiti.

HOWEVER, do bear in mind that, if you miss your Flexiti payments and they end up sending your debt to a collections agency, this will get reported on your credit report and can have a substantial negative effect on your credit score.

How does Flexiti work?

Flexiti has partnered with over 8,000 retailers across Canada to offer BNPL in-store financing options to customers. When making a purchase at a participating retailer, depending on the merchant, you can apply online before you make your purchase or apply in person at the participating store.

Different retailers offer different purchasing options, but generally you’ll have the option to split up your purchase into monthly payments over a set term. You may also have the option to go with a deferred plan where no payments are required at any set time, however you must pay off the balance before the end of the term or you’ll have to pay any interest that has accrued since you first made the purchase. 

Initially you will not have to pay interest (though there may be admin and annual fees). However, if you don’t pay off your debt during the term, you’ll then be subject to very high interest charges that vary per retailer, but can range from 31.99%, 35% (the maximum for Quebec residents), 36.99% and 39.99%. 

Note also that Flexiti has a Flexiti Wave Card that is designed for people with a lower credit score and it does not offer an interest free period, though it does let you make payment plans with 24, 36, 48 and 60 month terms at eligible retailers. The Flexiti Wave Card features a promo annual interest rate of 19.99% or 29.99% (the interest rate you’ll be charged depends on your creditworthiness, i.e. how high your credit score is), plus payment protection insurance premiums, fees and taxes, if applicable. If you miss any payments, you’ll be subject to an interest rate of 39.99% or 45.99% (35% for Quebec residents.

Is Flexiti a credit card?

The Flexiti card is not exactly the same as a credit card as there are some differences:

• You can only use your Flexiti card at retailers who have specifically partnered with the company. With a credit card you can use it at any retailer that accepts Amex, Visa or MasterCard in Canada and worldwide.

• The interest rate you could be charged is very high. The average interest rate in Canada for credit cards is around 20%, whereas once you complete the promotional interest-free period with Flexiti, you could be subject to interest rates as high as 39.99%.

• Flexiti does not report your credit account or payments to credit bureaus, whereas traditional credit cards do. This means you won't get the benefits of building your credit score when you make your credit payments on time. HOWEVER, if you don't repay what you owe to Flexiti and so they send your debt to a collections agency, that will be reported on your credit report and will have a significant negative effect on your credit score.

Does Flexiti do a credit check?

When you apply for financing, Flexiti does conduct a hard credit check by contacting a credit bureau to check your credit report.

A credit check can be either a "soft" credit check or a "hard" credit check.

1. Soft Credit Check: This is a less invasive credit check that doesn't impact your credit score. It provides just a basic overview of your credit report and is usually only used for things like background checks and credit card or loan pre-approvals. Soft credit checks can be done without your permission and don't have any kind of negative impact on your credit report.

2. Hard Credit Check: A hard credit check, on the other hand, is a much more comprehensive review of your credit score and credit report and is often conducted when a person applies for credit. Unlike soft checks, hard credit inquiries can have a temporary negative impact on your credit score. That’s because credit checks can make up 10% of your overall credit score. However, the impact is usually minor and temporary though multiple hard inquiries within a short period can lower your credit score even more.

What credit score is needed for Flexiti?

Officially, on its website Flexiti states that to apply for a card you only need:

• To be a resident of Canada. 

• Be the age of majority in your province or territory 

• Have a valid form of ID 

The website does not explicitly state what credit score you need to be approved for a Flexiti card, though generally a good credit score in Canada is considered 660 and above. So, as long as you have a credit score of 660 or higher you are likely to be approved. Note, however, that individual retailers may have their own credit score requirements to be approved for a Flexiti card. 

Does Flexiti appear on your credit report?

Flexiti does not report your credit account with them or any of the payments you make to credit bureaus. This means that you will not benefit from boosting your credit score and building a positive credit history when you make your payments on time.

HOWEVER, if you end up missing payments to Flexiti and they end up sending your debt to a collections agency, that will appear on your credit report and will likely have a considerable negative effect.

The Bottom Line

Using Flexiti does affect your credit score because the company does a hard check before you’re approved. However, the impact is usually small and temporary. It can be a useful card but only if you pay off all your debt within the interest free term, otherwise the high interest could lead to a debt load that’s hard to manage.