Your feedback is essential to help us improve - click here to take our 3 minute survey.

“How Klarna wrecked my credit rating over £5”

“How Klarna wrecked my credit rating over £5”
Image source: Getty Images

A mum has claimed that Klarna has wrecked her “20-year-old good credit rating over £5”. Writing on the UK parenting forum, Mumsnet, she says, “Despite the glossy marketing, I think they are totally untrustworthy.”

With more of us using Klarna and other buy now pay later sites, it’s a scary thought that we could accidentally damage our credit rating. Let’s take a look at why she was caught out and how you can avoid wrecking your credit rating.

How Klarna damaged my credit rating

The UK based mum explains, “A few months back, I used Klarna for the first time to purchase some clothing from two retailers. It all went fine – payments taken automatically and all getting paid off.”

But things took a turn for the worse when she bought a new phone for her teenage son. She says, “The option to pay interest free with Klarna was cheaper than a new phone contract, so we went with that.”

She thought all was well. But then, she says, “I received a credit alert to say my credit rating had changed. For 20 years it’s been ‘good/excellent’, so, panicking, I logged in.”

It turned out that the UK-based mum had accidentally “missed a £5 payment to Klarna.” And this has immediately affected her credit rating and possibly made it harder for her to get other finance in the future.

Autopay is not automatic on the Klarna website

The mum, who writes under the Mumsnet name of Bluebellberry, uncovered a little known catch on the Klarna website.

The phone she bought was classed as finance rather than an order. She explains, “Apparently, I was meant to press ‘enable Autopay’.” But at the time, she didn’t realise that she needed to do this on the Klarna website and assumed the payment would be set up to auto-pay just like her previous purchases.

The stressed mum exclaims, “How on Earth was I meant to know this? Not once had Klarna said, ‘By the way, for this phone order, you need to comb through the app to find Autopay’. The other payments had been automatic, so why think different?”

The Klarna website confirms that there are several steps to enable an autopayment on a finance purchase.

You need to:

  • Go to your profile settings and click on ‘Payment methods’
  • Or select ‘Purchases’ or ‘Payments’ and find the purchase you’d like to set up automatic payments for
  • Add your bank account or card information, and click the button labelled ‘Autopay’
  • If set up successfully, the ‘Autopay’ button will turn green

Extra interest and fees now due

The stressed Mum is worried that she will now have extra costs as, “Klarna have also added interest and told me to pay a fee or my account will revert to 18% interest.”

She adds, “At no point did Klarna tell me this before, during or even after ordering the phone. In fact, if it wasn’t for the credit alert, I’d still have no idea.”

Be careful and read the small print

It just shows how easy it is to get a bad credit rating, even over something small. It’s all too tempting to click through quickly when we’re making a purchase and forget to read the small print. I know I’ve done it!  It’s a lesson to us all to sort out auto-payment on all Klarna orders, including those on finance.

The mum hopes that others can learn from her mistake. She says, “If this post stops one person getting into this situation, then it did something.”

And she warns, “If you do already have finance with them, make sure Autopay is on – even if you’ve auto-paid before.”

Paying credit card interest? Time to switch to a 0% balance transfer card.

If you can’t afford to clear your credit card balance at the moment and are paying monthly interest, then check to see if you can shift that debt to a new credit card with a long 0% interest free balance transfer period. It could save you money.

By transferring the balance of any existing card (or cards) to a new 0% card, you could be debt-free more quickly – since your repayments will go entirely towards clearing the balance of the debt you owe, and not on interest charges.

Discover our top-rated picks for 0% balance transfer credit cards here and check your eligibility before you apply in just a few minutes – it’s free and won’t affect your credit score.

Was this article helpful?

Some offers on The Motley Fool UK site are from our partners — it’s how we make money and keep this site going. But does that impact our ratings? Nope. Our commitment is to you. If a product isn’t any good, our rating will reflect that, or we won’t list it at all. Also, while we aim to feature the best products available, we do not review every product on the market. Learn more here. The statements above are The Motley Fool’s alone and have not been provided or endorsed by bank advertisers. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Barclays, Hargreaves Lansdown, HSBC Holdings, Lloyds Banking Group, Mastercard, and Tesco.