(WXYZ) — You may have seen it before: when you go to buy those concert tickets, book a flight, or buy clothes, even groceries, the option to buy now and pay later.
"I love the idea first of all because I can just buy things that I like and pay later and I don't have to worry about dipping into my savings," said Karyn Miller.
The Westland native is familiar with this flexible payment option.
"Oh my god..I need to stay away from Amazon, I do a lot of shopping," Karyn said.
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One of her most recent purchases was a dash camera for her car. But instead of paying for it all at once, she chose to pay for it in installments.
"I had to invest in one of these, and I had to pay $129 for it," Karyn said. "I did in, let's see, with the shipping, I broke it up into two payments."
Experts say Buy Now Pay Later loans are becoming more popular among Americans, and soon it could impact your credit score. This comes after FICO announced plans to launch two separate credit scores in the fall that include Buy Now Pay Later data, giving lenders a better picture of a consumer's repayment history. And Fico is the first leading credit score company to do this.
"Traditionally, when a consumer has paid these type of loans off, they haven't got any credit on their credit scores that they paid a loan off. If everything's reported to the credit agencies, they will get credit for it, so that may help," said financial planner Rick Bloom.
Bloom says his No. 1 concern with this type of loan is the potential to overspend.
"Sometimes…consumers don't realize how much they're borrowing, and they put themselves in a difficult position by having too many outstanding loans," Rick said.
That's why he encourages shoppers to think twice before borrowing money. Know if there are any significant fees involved, such as late fees, and really decide if the item is something you can afford.
"I think down the road it will help consumers because it will limit how much they spend, and I think they'll eventually know more about the terms of their loan," Bloom said.
As for Karyn, buying now and paying later is something she's comfortable doing, and while she loves to shop, she says she keeps a close eye on all her expenses.
"A lot of people live above their means, I'm not one of those people, so I know how to budget my money very well," she said.
FICO told 7 News Detroit in a statement:
“Using BNPL services responsibly and paying on time is unlikely to negatively affect your credit score,” said Ethan Dornhelm, vice president of scores and predictive analytics at FICO. “But missing payments could contribute to a lower score.”
