Pay-in-4 Plans

Dear Dr. Per Cap:

You haven’t written about credit reports in a while. Any new developments with how the credit bureaus are listing information on our credit reports?


Wise Borrower

Dear Wise Borrower,

A while back, I wrote about point-of-sale loans that allow shoppers to make small purchases with payments. Increasingly popular in stores and online checkouts, the loans are like old-school layaway except you get the product right away instead of waiting until you’ve made all the payments.

One drawback to point-of-sale loans ― sometimes dubbed “pay-in-4 plans” because they typically require one payment upfront followed by three bi-weekly payments ― is that they don’t usually show up on a person’s credit report.

That presents a major drawback for anyone needing some clean payment history to either improve or repair their credit. However, a new development is that very soon the credit bureau Equifax will start including “pay-in-4 plans” on its consumer credit reports.

This is good news for anyone looking for a little credit score boost, especially folks who use “pay-in-4 plans” on a regular basis. The other two credit bureaus, TransUnion and Experian, aren’t currently reporting “pay-in-4 plans,” but are working to include them on their credit reports in the future.

Take note that there are a few glitches the bureaus need to work through along with lenders who specialize in point-of-sale like Afterpay, Klarna, and Affirm. For example, short-term loans which are quickly opened and closed can currently ding a person’s a credit score. The plan is to tweak the scoring models, so they don’t unnecessarily harm borrowers.

Whether you call it “point-of-sale,” “pay-in-4,” or my personal favorite “buy now, pay later,” this form of financing is popular among folks with thin credit histories that make it difficult to secure larger traditional loans. The bonus of now having these small loans listed on credit reports could go a long way toward improving credit scores.

However, bear in mind that if a person doesn’t make “pay-in-4 plan” payments on time as agreed that poor payment history will show up on a credit report, too, which can negatively impact a credit score.

Like any loan or form of credit, it’s super important for borrowers to use these products responsibly and get familiar with all the terms and conditions.

Ask Dr. Per Cap is a program funded by First Nations Development Institute with assistance from the FINRA Investor Education Foundation. For more information, visit To send a question to Dr. Per Cap, email