Episode Transcript
[00:00:00] It's Tuesday. That means it's Take Control Tuesday. Mansa Musa is on the phone with me. And Mansa. People are lured in by these buy now, pay later, pay in four paydays, whatever you want to call it. But it could do some real damage coming up real soon if you're in too deep with these. Yeah, we talked about this before. But you can now do buy now, pay later on anything that you buy online in stores.
[00:00:32] And the problem with these accounts is that they are a double negative on your credit score. 15% of your credit score is based on length of credit history.
[00:00:44] The longer the history on a particular account, the better. Buy now, pay later accounts are inherently short term. Exactly. They're only three, four, six months or whatever.
[00:00:58] So you want a long term payment history of at least two years, preferably five years on your account. So these accounts don't work. So every time you open one of these accounts, it lowers your average age of credit, which will negatively impact your score. Yeah. Every time you pay off one of these accounts, it lowers your credit score.
[00:01:25] Wow. So it's a no win situation.
[00:01:28] So here's what I tell people. First of all, if you got to do buy now, pay later, maybe you can't afford it and you should reconsider the purchase. But if you have to do it, use a credit card.
[00:01:42] Now, we don't encourage people to carry balances on their credit cards. But if you're in a situation where you have a choice between a short term buy now, pay later account or putting it on your credit card, put it on your credit card.
[00:01:59] Depending on your credit utilization ratio, how long you've had the credit card, it could actually help your score. But one thing for sure, it doesn't have the same negative impact on your score when you use it or when you pay it off. Yeah, that is heavy duty because it is just so easy to get sucked into these loans. And starting in October, or I should say by October, they're doing it now, these accounts are going to report to your credit score.
[00:02:33] So no win situation.
[00:02:35] Yeah, it is. Don't do it.
[00:02:38] Exactly. Well, that is all excellent information.
[00:02:42] Please go to our website for the details. When we talked about this before at take control Tuesday.com also share this information the moment you get it. You make sure you share it with others because I know that you know plenty of people who are doing this right now. Manta is always. Thank you. Thank you.
