{"id":68534,"date":"2023-11-15T05:15:44","date_gmt":"2023-11-15T05:15:44","guid":{"rendered":"https:\/\/newcelebworld.com\/?p=68534"},"modified":"2023-11-15T05:15:44","modified_gmt":"2023-11-15T05:15:44","slug":"huge-blow-for-cash-strapped-shoppers-as-klarna-axes-popular-credit-product-used-by-90k-customers-in-run-up-to-christmas-the-sun","status":"publish","type":"post","link":"https:\/\/newcelebworld.com\/lifestyle\/huge-blow-for-cash-strapped-shoppers-as-klarna-axes-popular-credit-product-used-by-90k-customers-in-run-up-to-christmas-the-sun\/","title":{"rendered":"Huge blow for cash-strapped shoppers as Klarna axes popular credit product used by 90k customers in run-up to Christmas | The Sun"},"content":{"rendered":"

BUY Now, Pay Later giant Klarna is quietly winding down one of its regulated credit products used by around 90,000 customers, The Sun has learned.<\/p>\n

It comes as the product has faced technical issues over the last five weeks which have impacted some customers' credit scores, although it is understood this is not linked to its closure.<\/p>\n

<\/p>\n

Klarna's "Financing Account", which lets customers spread the cost of big-ticket purchases like phones or furniture over six to 48 months, has closed to new customers and will be wound down once outstanding debts are paid off.<\/p>\n

The account works like a credit card, allowing users to put multiple purchases onto it and pay them off in tandem while being charged some interest.<\/p>\n

This differs from Klarna's unregulated buy now, pay later (BNPL) products which cover one purchase at a time.<\/p>\n

Around 0.5% of Klarna's 18 million UK customers are understood to use the product, equating to roughly 90,000 people.<\/p>\n

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At the beginning of October, Klarna began experiencing an issue with the account where customer payments made by direct debit were not being registered in its system, The Sun understands.<\/p>\n

Direct debit is an arrangement where a fixed sum is automatically taken from your bank account by a company on a regular basis.<\/p>\n

Even though the money has been leaving customers' bank accounts, Klarna's system hasn't been linking the payments to its Financing Account, so it appeared like customers had failed to pay.<\/p>\n

This meant those customers were marked as missed payments, which could impact their credit rating and ability to apply for credit in future.<\/p>\n

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One customer complained that they had heard nothing from Klarna for more than two weeks after reporting that their payments weren't showing up.<\/p>\n

"It's not good service and customer support just to ignore my messages," they said.<\/p>\n

Another user added: "I've messaged Klarna twice they say there's an issue with their payments. It would be helpful if they reached out to those affected."<\/p>\n

Once Klarna became aware of the problem, it said it stopped reporting payment information to credit reference agencies, such as Equifax and TransUnion.<\/p>\n

However, The Sun understands that some customers' credit files have already been impacted.<\/p>\n

Klarna is now in the process of manually correcting these credit files and this should be completed by the end of this week.<\/p>\n

However, any customers who have applied for credit over the last few weeks – for example, for a mortgage – could have been refused the loan based on this incorrect information.<\/p>\n

Consumer campaigner Martyn James said: "I'd expect Klarna to correct all credit files urgently and then notify all affected customers\u00a0that the matter has been dealt with. <\/p>\n

"Compensation may apply too if someone has been turned down for lending off the back of the incorrect credit file."<\/p>\n

A spokesperson for Klarna told The Sun: \u201cWe\u2019re really sorry for the inconvenience caused to a small number of customers using one of our legacy financing products. <\/p>\n

"The problem will be fixed ahead of the next payment date at the beginning of December. <\/p>\n

"We\u2019re taking action to ensure this issue will not leave a mark on credit files. Our other payment products, including BNPL and Pay Now are not affected\u201d.\u00a0<\/p>\n

Klarna has another regulated financing product called "Term Loan", which just covers one purchase. It is understood this has not been impacted by the technical issue.<\/p>\n

What can I do if I spot an error on my credit report?<\/h2>\n

It's a good idea to check your credit report on a regular basis so you can spot any mistakes early before they damage your score.<\/p>\n

If you notice a late payment recorded on your report and believe it's a mistake, contact both the company that reported it and the credit reference agency as soon as possible.<\/p>\n

There are three main credit reference agencies: Experian, Equifax and TransUnion. <\/p>\n

You'll need to check your report with all three firms and contact each of them if you spot an error.<\/p>\n

Once you've reported a mistake, they should get in touch with the company and ask them to remove it from your record if it's inaccurate.<\/p>\n

In the meantime, you can ask to add a "notice of correction" to your report where you can explain you're disputing the error. <\/p>\n

If you apply for any credit, lenders will be able to see this note and it may help influence their decision.<\/p>\n

It's a good idea to let the lender know about the error, too, and tell them you're disputing it.<\/p>\n

Here's how to contact each credit agency:<\/p>\n