Does Sezzle Affect Your Credit Score?

How Sezzle May Affect Your Credit Score

While Sezzle is designed to minimize credit impact, certain actions can influence your score. Understanding how your payment behavior with the service can be reported is key to managing your credit health.

1. Initial Soft Inquiry: When you sign up, Sezzle performs a soft credit inquiry to approve your account. This type of check does not affect your credit score but is visible to you on your credit report.
2. Optional Credit Building: Through its Sezzle Up program, you can opt-in to have your payment history reported to the credit bureaus. Consistent, on-time payments can then help build a positive credit history.
3. Missed Payments: If you miss a payment, Sezzle may deactivate your account and charge a fee. While this initial step doesn't directly impact your credit score, it can lead to more serious consequences.
4. Negative Reporting: For users in the Sezzle Up program, a late payment may be reported to the credit bureaus, which can lower your score. For all users, significantly delinquent accounts may be reported.
5. Accounts in Collections: If a balance remains unpaid for an extended period, Sezzle may send the account to a collections agency. A collections account is a significant negative event that will seriously damage your credit score.

How Much Will Sezzle Affect Your Credit Score?

The extent to which Sezzle impacts your credit score isn't straightforward. It largely depends on your payment history and how the platform reports your activity to credit bureaus.

• Credit Reporting. Sezzle may report your payment history to the credit bureaus. Consistent, on-time payments can positively influence your score, while missed payments could have a negative impact.
• Credit Inquiries. Applying for Sezzle typically results in a soft credit check, which does not affect your credit score. This allows you to see if you qualify without any negative impact on your credit history.
• Missed Payments. Failing to make payments on time can lead to your account being sent to collections. A collections account reported to the credit bureaus can significantly lower your credit score.

How You Can Avoid Sezzle Affecting Your Credit Score

Make On-Time Payments

The most direct way to protect your credit is by making all Sezzle payments on time. Since payment history is reported to credit bureaus, consistent, punctual payments are essential to prevent negative marks and can contribute positively to your credit profile over the long term.

Understand Reporting Features

Be mindful of features like Sezzle Up, which enables credit reporting. While this can help build your credit history, it also means late payments are reported. Understand the terms before opting in to ensure you can manage the repayment schedule and avoid negative impacts.

Monitor Your Credit Regularly

Keep a close eye on your credit reports from the major bureaus. This allows you to see exactly how your Sezzle account activity is being reflected and to quickly address any potential issues or inaccuracies before they can cause significant damage to your score.

Ways to Improve Your Credit Score

Improving your credit score is an achievable goal that relies on consistent, positive financial behavior. By following some proven methods, most people can see meaningful changes to their score within three to six months.

• Monitor Your Credit Reports. Regularly obtain your free credit reports from the three major bureaus to identify and dispute any inaccuracies or signs of fraud that could be hurting your score.
• Establish Automatic Bill Payments. Your payment history is the most significant factor in your score, so setting up automatic payments is a simple way to ensure you never miss a due date.
• Reduce Your Credit Utilization Ratio. Aim to keep your credit usage below 30% of your total available credit, as high utilization can negatively impact your score.
• Become an Authorized User. You can be added to the credit card account of a trusted person with a strong payment history, which can help improve your own credit profile.
• Diversify Your Credit Mix. Lenders prefer to see a healthy mix of credit types, such as revolving credit from cards and installment loans like auto or personal loans.
• Limit Hard Inquiries. Applying for too much new credit at once can temporarily lower your score, so space out your applications and use prequalification tools when available.

The Bottom Line

Sezzle's effect on your credit score isn't straightforward. While on-time payments can potentially build credit if reported to the bureaus, late payments risk damaging your score. Your payment history is key.

Frequently Asked Questions

Does Sezzle report to credit bureaus?

Yes, Sezzle can report your payment history to credit bureaus through its Sezzle Up feature, potentially helping you build credit with consistent, on-time payments.

Will using Sezzle lower my credit score?

Using Sezzle responsibly is unlikely to lower your score. However, missed payments can negatively affect it, as this information may be reported to the credit bureaus.

Does pre-qualifying for Sezzle affect my credit score?

No, pre-qualifying for a Sezzle account only involves a soft credit check, which does not impact your credit score in any way.