At Klarna, one of our core principles is to ensure responsible spending. We want to make sure that you, our customers, can buy what you love and pay for it in a way that suits you best – be that deferring a payment for 30 days, or splitting the bill into instalments. However, what sits at the heart of this, is ensuring you are able to afford that purchase in the first place.
Whilst we believe that everyone should be able to make these decisions for themselves, sometimes it can help to have someone else check that you can really afford it, and that it won’t have a negative impact on your financial wellbeing.
That’s where our eligibility and credit checks come in, they’re a safeguard to protect you from overspending. It’s important that we always make sure that you’re using Klarna in a safe and sustainable way. It simply wouldn’t be responsible of us to lend to everyone, every time and so we have eligibility checks in place which ensure your spending is sensible and appropriately assessed.
1. Eligibility checks.
We have strict eligibility checks in place, these take place each and every time you make a transaction. This means that just because you’ve used Klarna once, it doesn’t necessarily mean you will be able to use us again. Our eligibility checks are an integral part of our underwriting process and use a variety of factors including both internal and external data.
2. Credit checks.
For our Pay later products (Pay in 30 days or Instalments) a soft credit check will be performed. We review a customer’s previous credit history alongside other factors to review if they can afford to use our products. A soft credit check does not affect your credit score and is strictly between you and Klarna — this is not visible to other lenders.
Use of our Financing product is dependent on a full credit check, a customer’s previous credit history and other factors are reviewed. Due to this product being a regulated product where a formal credit agreement is taken out, this will be visible on a customers credit file and may impact a customer’s credit score. We make this clear to consumers who are considering using Klarna financing product in the credit application they complete and sign.
3. Payment history.
In addition to the checks we have in place, we also take a look at your purchase history with Klarna. This means that when you use Klarna for the first time, you will have a smaller limit than regular repeat customers. For those that haven’t paid us back, they will be unable to use Klarna in the future.