BNPL firm Zilch to start sharing data with credit rating agencies

By

Nigel TAYLOR

Published
Jan 16, 2023

UK buy-now-pay-later (BNPL) financier Zilch is to begin sharing data on customers' balances and repayments with credit rating agencies. The move is being seen as a possible restriction on borrowing if consumers fall behind on payments.

The tightening of its lending rules comes as BNPL companies in general brace themselves for regulation from the UK’s Financial Conduct Authority (FCA). New powers are expected to restrict lending later this year with compulsory credit checks to be among the new regulations.

Zilch, which claims three million users, had adopted a ‘soft’ credit check on customers until this month. It would perform its own lending assessment and set an affordability limit, although this would not impact the consumer’s credit rating, it told The Telegraph. 

Chief executive Philip Belamant said the change would allow people to build up their credit scores without taking out expensive credit cards.

Belamant added “Zilch has always done a full affordability check when customers sign up. We have taken it a step further on the reporting side. Within the next 30 days, Zilch data will start to appear formally on customer’s credit scores. We hope by the middle of the year we will see regulation move in on this space.”

Zilch’s payments app and card allows consumers to pay in four instalments over six weeks. There are no upfront fees for using its app with a partner store and it charges a £2.50 flat fee for purchases from any other store.

The BNPL sector has grown fast in recent years and many relied on it for Christmas purchases. While it’s been extremely useful for consumers, allowing them to buy products and pay in instalments with no interest payments building up, there's been plenty of criticism that it's encouraged people to spend more than they can afford. And the fact that BNPL payments could be approved without reference to a shopper’s credit rating made this more likely, critics said.