We’ve all encountered it – that moment at the checkout when you’re given the option to conveniently split your purchase into four installments. While some retailers may use the terms EasyPay or FlexPay, the widely recognized name for this payment method is “Buy Now, Pay Later” (BNPL). This payment method isn’t limited to big-ticket items; Affirm can be used for anything, from a mouthwatering entree from a restaurant to season tickets for your favorite NFL team.
Affirm, a popular BNPL service, allows you to bring your purchase home immediately and pay for it in convenient installments.
What credit score is necessary to be approved for an Affirm payment plan?
Understanding Affirm’s Credit Score Requirements
Having a credit score of 640 or higher will greatly increase your chances of approval with Affirm. However, even if your credit score is lower, there is still hope. Reports indicate that some borrowers with credit scores around 550 have been successfully approved. The likelihood of approval depends on several factors, including your revolving balances, the number of hard inquiries on your credit report, your payment history, and how close you are to reaching your credit limit.
Affirm’s Unique Offerings
Affirm distinguishes itself in the Buy Now Pay Later (BNPL) industry by providing customers with two flexible options: longer-term installments for larger purchases and convenient “pay in four” plans for smaller expenses. It’s worth noting that while the four-payment plan offered by Affirm is interest-free, customers should be aware that interest charges apply to the longer-term plans. This is particularly important to consider when individuals are facing financial challenges that would otherwise make the expense unaffordable without the option of BNPL. By offering these choices, Affirm aims to empower customers to make informed decisions about their purchases and manage their finances responsibly.
Quick Facts about Affirm
- Loan amounts range from $50-$17,500
- There’s no stated minimum credit score, but reports show borrowers will need a minimum of about 550 for approval
- Interest charges are 0% for Pay-in-Four plans, but up to 30% APR for monthly plans
- Affirm does a soft credit check that won’t affect your credit score
- You can choose to make payments in four installments over eight weeks or opt for a monthly payment plan over 3-36 months
- No other fees except for late or missed payments
Retailers that Offer Financing through Affirm
Affirm partners with a range of well-known retailers, including Peloton, Adidas, Best Buy, Pottery Barn, Delta Vacations, Expedia (for hotels and vacation packages), Neiman Marcus, Nike, Purple, Saks Fifth Avenue, Target, and Walmart, to provide flexible financing options.
Affirm vs. Afterpay: A Comparison
Afterpay, an Australian-based BNPL company, competes directly with Affirm. The primary difference is that Afterpay only offers four-payment plans repaid over six weeks with no interest charges. However, they do charge late fees. Afterpay is accepted by 100,000 retailers globally.
Affirm, on the other hand, has seen significant growth with the number of active merchants on their platform growing from 12,000 to 207,000 year over year, and active consumers increased 137% to 12.7 million people.
So, the choice between Affirm or Afterpay depends on which retailers you shop at and which payment plan and interest rate are more beneficial to you.
Is Affirm Better than a Credit Card?
If you’re using a no-interest repayment plan, Affirm will likely be better than paying with a credit card, and it is definitely better than turning to a payday lender. But if you need a longer-term plan that charges interest, a balance transfer credit card could be a better option.
Tips to Improve Your Chances of Approval:
Before we delve into exploring ways to increase your chances of approval for Affirm, it’s important to understand the factors that Affirm considers. These may include your credit score, your Affirm borrowing history, and the amount of personal information you provide. Now, let’s dive into some practical tips to improve your chances of approval when applying for Affirm financing.
- Regularly check your credit score and report for any discrepancies or errors.
- Consistently pay your bills on time to enhance your payment history.
- Work on reducing your debt-to-income ratio by paying off existing debts.
- Consider the option of using a co-signer if your credit score is on the lower side.
- Ensure you have a stable employment status and a consistent income stream.
Frequently Asked Questions:
Does Affirm approve every application?
No, approval is contingent upon various factors, including your credit score and income.
Does Affirm conduct a credit check?
Yes, a soft credit check is performed during the approval process.
What steps can I take to improve my chances of getting approved by Affirm?
Focus on improving your credit score, maintaining a stable income, and reducing your debt-to-income ratio.
What is the minimum credit score required for Affirm approval?
While there is no strict minimum, a score of 640 or higher is generally considered favorable.
Does Affirm approve borrowers with bad credit?
Technically, no. To be assured of approval for an Affirm loan, a “fair” credit rating is required. However, there have been instances reported where approval for an Affirm payment plan was granted despite poor credit. Customers have reported receiving approval even with credit scores as low as 550. Other factors, such as previous history as an Affirm customer and a solid payment history with Affirm, can contribute positively if your credit score is below 600.
Can using Affirm improve your credit score?
It’s a possibility, but not a guarantee. Affirm does report to the credit bureaus, so making timely payments can have a positive impact on your credit score. However, it’s important to remember that credit score calculation takes into account various factors and isn’t solely based on one aspect. Always consider your overall financial behavior.
In conclusion, Affirm provides a flexible and easy-to-use financing option, enabling customers to make purchases and pay over time. As with any financial decision, it’s essential to understand the terms and conditions involved fully. Keep in mind that while Affirm can offer convenience and possibly help improve your credit score, it doesn’t guarantee approval for every application. Paying attention to your credit health, maintaining a steady income, and reducing your debt-to-income ratio are all proactive steps towards increasing your chances of approval. Use Affirm wisely, and it can be a useful tool in your financial toolkit.
