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Unlike Before, where BNPL loans did not report to credit bureaus, some companies now plan to report defaults, potentially damaging consumers' credit scores. Missing payments could hinder credit-building efforts, especially for individuals with initially low credit scores.
Limited Legal Protections
One of the most concerning aspects of BNPL plans is their regulatory loopholes. Federal laws like the Fair Credit Billing Act offer protections for credit card users—such as dispute rights and fraud protections—but these don't apply to most BNPL arrangements.