Does Affirm Build Credit? A Complete Guide.

Make purchases now and pay later with Affirm. Our guide will help you understand its effect on your credit score or Affirm Build Credit – read on to learn more!

Are you considering using the Affirm payment option to finance a purchase with the installment but are wondering what impact it will have on your credit score?

You aren’t alone – many people want to know “Does Affirm build credit?” and “Does Affirm check credit?” 

This extensive guide will answer all your questions about how Affirm operates and influences your credit.

We’ll cover topics such as: does affirm show up on a credit report, and does affirm a hard credit check? Read on to learn more about how Affirm could affect your financial standing.

Does Affirm Build Credit A Complete Guide
Does Affirm Build Credit A Complete Guide

A brief overview of Affirm 

Affirm is a visionary company that offers customers a Buy Now, Pay Later financing method. This entitles consumers to purchase goods and services and pay for them later in smaller installments.

Affirm works by allowing customers to apply for a loan at checkout. Once approved, customers can select from multiple repayment plans tailored to their budget.

The repayment plans can be customized with flexible payment terms and no hidden fees or compounding interest.

Affirm also provides educational aids to help people make better financial decisions and real-time notifications to keep them informed throughout the process.

By offering this unique financing option, Affirm makes it easier for people who may need access to traditional credit products to make larger purchases without the burden of paying upfront.

Does affirm check your credit score while evaluating your application?

When assessing your application, Affirm does a soft pull of your credit history. This is also known as a ‘soft credit check’ or a ‘soft inquiry,’ and it does not impact your credit score.

It is used to verify your identity and assess financial information related to you, such as current debt obligations, payment history, and income.

They do not use hard inquiries, which require further personal information and can impact your credit score.

Lenders typically make hard inquiries for loan approvals, also known as ‘hard credit pulls’ or ‘hard inquiries.’ Affirm does not utilize this type of check.

Does affirm help build your credit?

Yes, Affirm may help build your credit. When you take out a loan with Affirm and make payments on time, that loan repayment activity is reported to a credit bureau, which can positively impact your credit score.

However, making late payments on an Affirm loan or using less of your available credit will positively affect your score.

Creating an account or seeing if you prequalify for a loan through Affirm will not affect your credit score.

To ensure that Affirm helps build your credit, it’s essential to pay attention to how much credit you use, how long you’ve had credit, and make sure that all of your payments are made on time. If you have any overdue payments, this may also impact your score.

Does affirm show up on the credit report?

Affirm currently reports some loans to Experian, although they may report to other credit bureaus in the future.

Not all loans are reported, and there is a higher chance that loans with an interest rate above 0% will be reported.

If you take out a loan with Affirm, it is vital to ensure that you make payments on time and in full to avoid any negative marks on your credit report.

Although this isn’t always feasible, it is worth considering when taking out a loan from Affirm, as these will be reported on your credit report and could affect your ability to get other loans.

Does affirm report late payments?

Yes, Affirm does report late payments. Even if you make a partial payment or miss a payment, this can have severe consequences regarding your credit score and chances of getting another loan through Affirm.

This is because lenders may be less likely to work with you if they see that you need to be more reliable when making payments on time. 

So you must take all necessary actions to ensure that all payments are made on time and in full each month, as this will improve your credit score and enhance the chances of being approved for future loans.

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Does Affirm use Experian or TransUnion?

Affirm does not use Experian or TransUnion. Instead, they use their own proprietary algorithm to assess creditworthiness.

This algorithm is based on many criteria, such as payment history and present financial situation, but it does not rely on the traditional Experian or TransUnion credit score.

An affirm will also consider other factors, such as your income, bank account activity, and shopping patterns, to evaluate your loan eligibility.

In this way, Affirm can provide those traditional lenders access to financial services that they may have overlooked.

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The answer could be more precise when it comes to whether or not Affirm will help build your credit score. Depending on your situation and how you use the service, Affirm may or may not end up helping you build a better credit score.

While using Affirm can help you access financing for purchases that you may otherwise be unable to make, you must use the service responsibly and pay off all of your balances in full and on time to maximize your chances of seeing an advancement in your credit score. 

Eventually, only time and responsible usage will tell if Affirm helps build your credit score.

About Author

Dhiraj Jha
Dhiraj Jha
As a personal finance and credit cards expert, I provide valuable insights and advice on budgeting, saving, investing, and debt management. I am also an expert on credit card rewards programs and help readers make informed decisions about which cards are right for them. My goal is to help people improve their financial literacy and make better financial choices.