Borrowers with a “perfect credit score” and a “few” buy now, pay later transactions have been declined mortgages, brokers have told the Money blog in an exclusive survey.

Several brokers told us a client’s regular use of BNPL services was a factor in their rejection by a high street lender.

Brokers have urged lenders to change the way they judge prospective borrowers with BNPL payments on their credit file.

In response to our findings, two of the biggest BNPL companies hit back, saying they provided innovative services and the rest of the financial industry should catch up.

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What is BNPL – and how do lenders get your usage data?

These schemes allow customers to spread out payments on purchases interest-free and are used by almost 11 million Britons, according to the Financial Conduct Authority.

Klarna, PayPal’s Pay in 3 and Clearpay are three of the most popular in the UK. Here’s how they interact with credit agencies…

Major UK lenders use data from at least one of these credit reference agencies to assess mortgage applicants, along with bank statements and other checks.

None of the BNPL companies perform hard credit checks before allowing a customer to use their services – so that part has no effect on your credit score.

However, payment data is shared, which can have an impact. Missed or late payments can have a negative effect, but BNPL companies say making payments on time can have a positive impact.

But some brokers have seen BNPL payments, whether completed or not, having the opposite effect on mortgage applications.

‘Credit files 150 pages long’

In a survey of 21 brokers commissioned with the Association of Mortgage Intermediaries (AMI), a trade body, 67% of brokers said BNPL had either played a part in or caused a user’s rejection by a high street lender.

Of those, 40% said their client had “regularly” used BNPL, and 21% said they had used it “habitually”.

27% said BNPL use had caused a client to be placed on a higher interest rate.

In one case, a broker told us a borrower had been declined by four high street lenders for using such services a “few times” – despite having a “perfect credit score”.

In another, a client was rejected after a lender identified 33 deferred Klarna payments over a 12-month period.

Some brokers also told us that Klarna payments had left their client with credit files more than 150 pages long.

Jack Tutton, a director at mortgage broker SJ Mortgages, told Money he had a client with 17 active Klarna accounts and more than 100 completed payments who was unable to get a mortgage with a high street lender, and was placed on a higher rate as a result.

His client had built up the Klarna purchases over 18 months, with the amount borrowed as low as £11, even though she had the funds to pay for the products in full.

“All the time people are borrowing money, lenders need to take that into account. I would be very surprised if they ignore those payments because from their perspective they are borrowing money to buy goods as low as like £11,” he said.

“For example, if you’re a first-time buyer, and you’re living at home, then you’re spreading payments of £14 over three months. From a lender’s perspective, that’s going to be a concern.

“My client had one of the longest credit reports I’ve ever seen. And when I spoke to her about it, it was just simply because it was easy to use Klarna.”

He explained that some high street lenders carried out a soft credit check on borrowers, and if the number returned wasn’t high enough, they didn’t get any further in the process.

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But some may ask to see bank statements, so even if a client’s BNPL habit hasn’t had a negative impact on their score, seeing several transactions from their account can raise questions.

“That’s going to open up a can of worms because if they can’t see it on your credit check, and then there are a multitude of transactions on your bank statement, that will need some answering,” he said.

But using BNPL doesn’t mean you will definitely be rejected. If you use it occasionally and sensibly, making payments on time, it shouldn’t have an effect.

One broker reported a mixed picture, with one client rejected but several others using BNPL schemes successfully getting a mortgage from a high street lender.

In total, 53% of the brokers we asked said lenders need to make it easier for people using BNPL to get a mortgage.

David Hollingworth, associate director at L&C, one of the country’s biggest mortgage brokers, said BNPL use shouldn’t be the sole reason a mortgage application is declined, but it could feed into the amount of borrowing available as the lender takes account of the level of commitment.

“Where it’s a very short-term agreement there may be little to no impact but borrowers who are using BNPL very frequently may find lenders taking that into account as a commitment and reducing the level of available borrowing.”

Stephanie Charman, chief executive of the AMI, said: “With consumer use of BNPL rising, it will increasingly come on to firms’ radar, but the benefit of using a mortgage adviser means that consumers are able to discuss their current financial position early on in the process.

“The survey data shows that while some applications are being initially declined, advisers are able to find a solution, giving that only 27% needed to place the customer on a higher rate than initially first researched.”

What do the BNPL companies say?

Klarna argues that having several completed purchases shows good money management, making a person more attractive to lenders.

“If a mortgage broker tells you that using Klarna means you won’t get a mortgage, find a different broker. Lenders have made clear they see healthy, short-term, interest-free BNPL use as a normal part of modern money management – and when used responsibly, it can help, not hinder, your chances of getting a mortgage,” a spokesperson told Money.

To date, Clearpay has never received any queries from customers in relation to it affecting their mortgage prospects.

It told Money that BNPL has become an “everyday payment” for millions of people looking for “innovative financial products”.

It said 95% of transactions are paid on time, with customers using its service to manage their spending responsibly.

“It is concerning that some sectors within the financial services industry may not understand how BNPL works and how consumers are using it to help organise daily expenditure. Clearpay expects lenders to assess BNPL usage in a proportionate manner that is reflective of the risk of the product and the overall financial profile of the customer,” it said.

“We are working hard with credit reference agencies, and the wider industry, to ensure that BNPL data is used fairly in credit decisioning and we support the ongoing work in the sector to drive improvements for customers and firms.”

BNPL is currently unregulated in the UK, but this is due to change in 2026, with Clearpay hoping it will set clear compliance standards for all providers and create a consistent operating environment.

PayPal was contacted for comment on several occasions but did not respond.

What do major banks and lenders say?

Lenders do not have a unified approach to BNPL when it comes to deciding whether to approve a mortgage – so a person who is rejected by one could sail through the process with another.

Money understands that at least one major high street lender does not consider the use of BNPL as part of their approval process at all, viewing the agreements as such short-term loans.

Nationwide captures agreements that have more than six months on them as part of the application process, but it said it saw “very little of this”.

Yorkshire Building Society said occasional BNPL use wasn’t a concern in isolation, but it “may contribute to an overall view if other indicators of financial stress are evident”.

“No decision is made in isolation, and consideration is given to credit card usage and loans – including BNPL – to understand spending habits and repayment history,” it said.

Santander treats pending BNPL payments like an outstanding debt, so while it doesn’t affect customers’ ability to get accepted, it can limit the amount it is able to lend to them.

Leeds Building Society doesn’t treat BNPL any differently to other financial commitments. It is built into its affordability model to make sure a customer’s mortgage is affordable when the BNPL balance is due.

NatWest doesn’t have any specific guidance to BNPL agreements, but does consider them as committed expenditure to make sure a customer’s mortgage is affordable.

Skipton Building Society stressed “responsible management” of all forms of credit, including BNPL, was important when applying for a mortgage.

Coventry Building Society said BNPL shouldn’t do any harm if customers keep up with repayments: “So picking up one or two things on BNPL might not make a great deal of difference, but if it becomes a little more of a habit and those repayments rack up, it could affect your chances of getting a big enough mortgage to buy the property you want.”

It warned, however, that BNPL could be an issue particularly for first-time buyers who were already stretched with mortgage borrowing.

HSBC lends based on the affordability and circumstances of each individual, but encourages applicants to understand their financial commitments before applying.

Already used BNPL? Here’s what you can do to boost your chances of getting your mortgage approved

As we’ve explained, using BNPL isn’t a surefire way to get rejected, but if you’re concerned about your mortgage approval chances, there are some ways to boost them.

Hollingworth said you should check your credit report with the big reference agencies and flag any negative records with your adviser: “If there have been missed payments try to get those up to date and put things back on track as soon as possible. The longer that the track record is clear before making the mortgage application the better.”

Mortgage lenders can view well-conducted credit arrangements positively as it shows that credit can be managed, but it makes sense to review your monthly budgeting.

“If there are outgoings that can be reduced or new credit arrangements that aren’t necessary, then it could help to meet the mortgage lender’s affordability assessment. Again, your mortgage adviser will be able to help you understand what you may be able to borrow,” he added.

Improving your credit score can also improve your chances of being approved and there are some simple ways to do this….