[00:00:00] Speaker A: It is Take Control Tuesday. And that means Mansa Musa is on the phone with me. And Mansa, everywhere you go you see the lure of Buy Now, Pay Later, Pay in for all those type of apps and things to seemingly make it easier for you to pay for an item. But what do you say about it?
[00:00:20] Speaker B: Well, Buy Now, Pay later has become a new thing in commerce. You can get these offers everywhere. Walmart, even Uber wanted to say nothing of the online stores. Now, the problem with Buy Now Pay later is that it negatively impacts your credit score even if you pay it on time. Let's say this, if you don't pay it on time, you know it's going to damage your credit score.
[00:00:50] Speaker A: Correct.
[00:00:50] Speaker B: But even if you pay it on time, it impacts your score. And the reason for that is that 15% of your credit score is based on length of credit history.
The longer you had credit accounts open, the more positive impact they have on your credit score.
[00:01:12] Speaker A: Okay.
[00:01:13] Speaker B: New credit will almost always bring your score down. The problem with Buy Now Pay later is that generally you open the account, they're now reported on your credit report that just started in 2025. But when you open the account and you've paid it off, it's no longer providing length of credit history to you. If you did a four month payment, that's the total length of your history.
Now, in credit scoring, what they do is they take your history, your age of each account and they average it. And if you are opening Buy Now Pay later accounts less than a year term, that could only negatively impact your. Wow. So as a solution, don't do Buy Now Pay Later. That would be the first thing.
[00:02:11] Speaker A: Right.
[00:02:12] Speaker B: If you do it, you need to have an understanding of the impact that it's going to have. Randy, it's been predicted that a lot of people don't know this. They're going to continue to do this and they're going to be surprised when they pull up their credit scores and find 50 to 60 points gone. Wow.
And if you are marginal in your credit score, if you're in the 600s, the low 700s, to say of anything below that, that can be significant.
And once again, we've said this in the past, having a good credit score is important to you and 21st century America because not only does it give you access to credit, it can impact your employment as well as other factors.
[00:03:04] Speaker A: Absolutely.
[00:03:05] Speaker B: So stay away from the Buy now pay later programs, especially the short term ones. Now, I'm not talking about a car loan or a mortgage because really those are Buy now, pay later as well.
But guess what? A car loan is probably going to run 60 months or more. A mortgage is going to run 15 years or more, right? Even though they may temporarily bring your score down when they're open, the upside potential of having those on your credit report is tremendous and will add significantly to your score for sure. Once again, a summary Stay away from short term, buy now, pay laters. And even if you pay them on time, just the fact that they're short term credit will pull your score down.
[00:03:56] Speaker A: So buy now, pay later, beware. And as always, Mansa, thank you so much for all the information you give us and you can find the
[email protected] and also we encourage you to like and share all this information to help somebody out. Manta, thank you, thank you.
