Gen-Z’s 742 Average Credit Score: Can BNPL Boost It Further? 14 Points

Mumbai

🚀 4.7 Million Indians Checked Credit Scores: Can BNPL Help Gen-Z Build Credit in 2025?

Key Insights

1. Massive Participation in Credit Score Awareness

   • August 2025 report by Paisabazaar: “How India Checked Credit Score”.

   • 4.7 million participants across 710 cities.

   • 25% Gen-Z (18–28 years) with an average score of 742.

2. Challenge for New-to-Credit Individuals

   • Youngsters struggle to access credit cards & loans.

   • BNPL (Buy Now Pay Later) is emerging as a credit-building alternative.

What is BNPL & How It Works?

3. BNPL Explained

   • Short-term credit instrument for purchases.

   • Merchant is paid upfront by BNPL provider’s bank/NBFC partner.

   • Customer repays later via one-shot payment or EMIs.

4. Example

   • Amazon Pay Later via IDFC FIRST Bank & Axio (NBFC).

   • Limit-based purchases up to ₹10,000 (example).

Repayment Models

5. Two Common Repayment Types

   • Pay Next Month → No interest if repaid in full.

   • EMI (3–12 months) → May include interest costs.

6. Provider Examples

   • Amazon Pay Later: 3, 6, 9, 12-month EMIs.

   • LazyPay: 15-day cycle or EMI option.

Credit Limit Setup

7. One-Time Registration

   • Requires KYC, PAN, bank account details.

   • Credit limit fixed post-verification.

8. Credit Limit Growth

   • Timely repayments → higher limit → bigger purchases.

   • Example: ₹10,000 limit can grow with responsible use.

Major BNPL Providers in India

9. Popular BNPL Options

   • Amazon Pay Later

   • Flipkart Pay Later

   • Tata Pay Later

   • Paytm Postpaid

   • Axio, ZestMoney, LazyPay, Simpl

How BNPL Builds Credit Score

10. Credit Bureau Reporting

    • Banks/NBFCs report BNPL repayment history to CICs (Credit Information Companies).

    • Example: Amazon Pay Later (IDFC FIRST Bank) → lender name reflects on credit report.

11. Credit-Building Strategy

    • Small monthly spends + timely repayment → decent score in 6–9 months.

    • Effective stepping stone for new-to-credit customers.

Risks of BNPL

12. Missed Payments Impact

    • Late repayment = drop in credit score.

    • Defaults remain for years, blocking access to future loans/credit cards.

Should You Use BNPL for Credit Building?

13. Safe Approach for Beginners

    • Start small with groceries/regular purchases.

    • Build repayment history over 6–9 months.

14. Next Step

    • Once a healthy score is built → move to loans, credit cards directly from banks.

✅ Conclusion

• BNPL is a double-edged tool:

  • ✔️ Helps new-to-credit individuals build score quickly.

  • ❌ Missed repayments can damage long-term financial health.

⚠️ Disclaimer (for The Profit India)

This article is for educational and informational purposes only. The Profit India does not provide financial advice. Readers are encouraged to consult a certified financial advisor before making credit or borrowing decisions. All figures and examples mentioned are illustrative and subject to change based on market conditions.