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Laybuy works like any other BNPL service, allowing them to pay for their purchases over the following few weeks without charging them any interest. If you purchase something using
Laybuy as your payment method, you’ll pay one-sixth of the amount at the time of purchase and the remaining amount will be deducted from your linked card in five equal weekly instalments. As an example, if you decide to buy a pair of shoes worth $120. When you pay using Laybuy, you’ll pay $20 on the day of the purchase and $20 every week for the next five weeks.
Laybuy claims that it assumes all the credit and fraud risk on every transaction and pays every merchant within 48 hours of purchase. Laybuy also boasts of multinational capabilities that can handle foreign exchange fees for retailers.
Paying for your purchases in installments is becoming increasingly popular thanks to buy-now-pay-later (BNPL) services like Laybuy. With Laybuy, you can split your payments over 6 weeks with no interest or fees (if you pay on time). But before you can use Laybuy, they need to assess your creditworthiness. This raises an important question – does Laybuy do a hard credit check?
The short answer is yes. When you sign up for Laybuy they will perform a hard credit check to determine your credit limit. This credit check will be visible to other lenders and can temporarily lower your credit score.
In this comprehensive guide, we’ll explain everything you need to know about Laybuy credit checks, including:
- What is a hard credit check?
- How Laybuy credit checks work
- The impact on your credit score
- Tips for responsible use of Laybuy
- Laybuy credit check frequently asked questions
What is a Hard Credit Check?
When a company performs a hard credit check, they access your full credit report from a credit reference agency like Experian, Equifax or TransUnion. This allows them to view your entire credit history, including:
- Current and past credit accounts
- Your overall utilization
- Payment history
- Public records like bankruptcies or court judgments
Hard checks are different from soft credit checks, where a lender only sees limited details about your creditworthiness. Soft checks don’t impact your credit score.
Too many hard credit checks in a short timeframe can worry lenders and cause a temporary drop in your credit score – usually around 5 points per hard check That’s why applying for lots of new credit at once can damage your credit score
How Do Laybuy Credit Checks Work?
When you apply for a Laybuy account, they will perform a hard credit check with Experian to check your credit score and history.
Based on this information, Laybuy will decide whether to approve your account application and determine your maximum Laybuy spending limit.
If approved, your credit limit starts at £120 and increases over time up to a maximum of £1200 based on your payment history and credit score. You can also apply for Laybuy Boost to get a higher limit of up to £1400.
Laybuy says they review your credit limit every 2-3 months. As long as you make your Laybuy payments on time, you may get credit limit increases to allow higher-value purchases.
The hard credit check will show up on your credit report, visible to you and other lenders. Too many of these types of checks in a short period can hurt your credit score temporarily.
How Does Laybuy Affect Your Credit Score?
Using Laybuy responsibly by making your payments on time can help build your credit history and improve your credit score over time.
However, there are also some risks that can negatively impact your credit score:
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Hard credit check – The initial check when you apply will likely cause a small, temporary drop in your score. Too many checks in a few months look risky to lenders.
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Missed payments – If you miss Laybuy payments, you’ll be charged a £10 late fee. Laybuy also reports missed payments to Experian, which can damage your credit score.
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High utilization – Using close to your maximum Laybuy limit can negatively impact your credit utilization ratio. Try to keep your balance below 30% of your limit.
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Multiple BNPL accounts – Having several open BNPL plans at once can indicate credit risk and hurt your credit score.
As long as you use Laybuy responsibly by making payments on time and keeping your utilization low, it likely won’t have a major negative impact on your credit score. Missed payments are what you need to avoid.
5 Tips for Using Laybuy Without Hurting Your Credit Score
If you plan on using Laybuy, make sure you use it responsibly to avoid credit score damage:
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Check your credit report – Review your credit report before applying to see how many recent hard checks you have. Too many in a few months will worry lenders.
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Pay on time – Set payment reminders and carefully budget to avoid missed Laybuy payments. Even one late payment can hurt your score.
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Keep balances low – Try not to max out your Laybuy limit. Experts recommend keeping balances below 30% of your credit limit.
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Limit BNPL accounts – Stick to one or two BNPL plans at once. Too many accounts can indicate credit risk.
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Track your credit score – Monitor your score with a free service like Experian or ClearScore so you can catch any changes.
Laybuy Credit Checks: Frequently Asked Questions
Does Laybuy do a soft or hard credit check?
Laybuy performs a hard credit check when you apply for an account. Soft checks (which don’t affect your score) are only used for occasional account reviews.
Can I get Laybuy with bad credit?
You can get approved for Laybuy even with bad credit, but your credit limit may be lower compared to someone with excellent credit.
How long does the hard check impact my credit score?
The Laybuy credit check may cause your score to drop a few points but it will recover within 6-12 months as long as you use credit responsibly.
Will I get approved for Laybuy?
As long as you are over 18, have a UK debit/credit card, and pass the credit check, you should get approved. Initial limits start at £120. Limits up to £1200 are available with good credit.
Does Laybuy report missed payments?
Yes, if you miss a Laybuy payment, they will report it to Experian which can significantly hurt your credit score. Avoid missed payments if possible.
Can I improve my credit with Laybuy?
Responsible use by making all your Laybuy payments on time can help build your credit history and improve your score over time. But the payments themselves don’t boost your score.
The Bottom Line
While the Laybuy hard credit check may cause a small temporary drop in your credit score, responsible use of their service shouldn’t significantly damage your credit as long as you make your payments on time each week.
Be cautious of having too many open BNPL accounts or high balances with Laybuy, as those factors can negatively impact your credit score. Monitor your credit report regularly and aim to keep your utilization below 30%.
Used wisely, Laybuy can allow you to spread out payments without accruing interest. Just be diligent about making payments on time to avoid credit score damage from missed payments.
Laybuy fees and charges
Like most BNPL platforms, Laybuy repayments are entirely interest-free. You don’t pay any additional fees or charges when you make your repayments on time. But if a payment instalment fails, it will be attempted again in 24 hours, but if it fails again, you’ll pay a late payment fee of $10.
If the instalment remains unpaid for another seven days, another fee will be applied. However, the total late fee payable for each instalment you miss is capped at $20, and the maximum late penalty payable on each purchase you make is capped at $40.
Laybuy gives you the flexibility to choose your repayment schedule. While purchasing something, you can select your payment day to make your weekly payments comfortably. But once you select your payment schedule and complete the order, you won’t be able to change your repayment dates anymore.
How much can I spend with Laybuy?
With Laybuy, you can spend a minimum of $120 and a maximum of $1,200. However, your approved limit may be less than $1,200 when you sign up on the platform. Laybuy decides your transaction limit according to various factors, such as your credit history and credit score.
If you wish to purchase something beyond your approved limit, you can do so by paying the amount you are short upfront. For instance, if your Laybuy available limit is $1,000 and you want to make a Laybuy purchase of $1,400. In this case, your first Laybuy payment due upfront will be $400, and your weekly repayments will be $200 each.