Klarna customers will see their transactions logged on their credit file from today as part of a huge shake-up from the buy now, pay later firm.
Late payments and unpaid purchases for "pay in 30" and "pay in three" orders made on, or after, June 1 will be reported to both Experian and TransUnion.
The change means you could be less likely to be accepted for credit or a mortgage in the future, if you regularly miss payments.
However, there is good news for those who use Klarna responsibly.
Payments that are made on time will also be recorded on your credit file, which could actually boost your credit worthiness.
Alex Marsh, head of Klarna UK, said: “The vast majority of the 16 million UK consumers who make Klarna BNPL payments in full and on time will be able to demonstrate their responsible use of credit to other lenders.”
Even though Klarna will start to report your repayment history from today, the new measures shouldn't impact your actual credit score until the end of the year.
This is because both Experian and TransUnion are still working on how to include Klarna payments in their overall scoring mechanism.
Have you had trouble using Klarna? Let us know: mirror.money.saving@mirror.co.uk
Any payment history you have with Klarna before today won't be reported. Klarna also isn’t currently sharing customer data with Equifax.
An Experian spokesperson said: "As with any form of credit, if you manage BNPL agreements responsibly they can provide a helpful way of spreading the cost of products and services – if you don’t borrow more than you can afford to repay and you do meet any agreed payments on time and in full.
"Like other credit, missed payments could result in extra charges and could, in time, affect your creditworthiness in the eyes of other lenders."
Rival buy now, pay later provider Laybuy shares its customers’ purchase history with Experian but not Equifax or TransUnion.
Clearpay doesn’t currently share customer data with any credit reference agencies.
As the name suggests buy now, pay later plans allow you to buy items and pay for them later - usually within 30 days without interest or any hidden charges.
When using a buy now, pay later service, you're unlikely to be subject to a “hard” credit check at any point - critics say this means people run the risk of borrowing money that they can’t actually afford.
In February, the Financial Conduct Authority said some firms had agreed to change the terms in their customer contracts to make them fairer and easier to understand.
The UK Government plans to change the law to bring some forms of unregulated buy now, pay later products into FCA regulation.
Jenny Ross, Which? Money editor, said: "Using buy now pay later is an easy and convenient way to pay for millions.
“However, with currently little to no information or warnings about the risks of incurring late fees or getting into debt, it raises concerns that many shoppers do not fully understand the products they're using.
"BNPL providers' move to work with credit reference agencies to report customer BNPL usage and missed payments is a step in the right direction, as it could help mitigate the risk of consumers taking on more BNPL credit than they can afford.
"However, this does not remove the urgent need for Government regulation of all BNPL firms to follow as quickly as possible to ensure users are properly protected."
