Big blow for cash-strapped shoppers as Klarna abandons the popular credit product used by 90,000 customers in the run-up to Christmas

Buy now, pay later giant Klarna is quietly phasing out one of its regulated credit products used by around 90,000 customers, The Sun has learned.

This is because the product has faced technical issues over the past five weeks that have impacted some customers’ credit scores. However, this is not believed to be related to the closure.

Klarna’s “financing account” has had technical problems over the last five weeks


Klarna’s “financing account” has had technical problems over the last five weeksPhoto credit: Alamy

Klarna’s “financing account”, which allows customers to spread the cost of large purchases such as phones or furniture over six to 48 months, is closed to new customers and will be closed once outstanding debts are paid.

The account works like a credit card, allowing users to make multiple purchases on it and pay them off at the same time, while being charged interest.

This is different to Klarna’s unregulated Buy Now, Pay Later (BNPL) products, which cover one purchase at a time.

It is estimated that around 0.5% of Klarna’s 18 million customers in the UK use the product, which equates to around 90,000 people.

According to The Sun, Klarna experienced an account issue in early October where customer direct debit payments were not registering in its system.

Direct debit is an arrangement whereby a company automatically deducts a fixed amount from your bank account on a regular basis.

Although the money has flown out of customers’ bank accounts, Klarna’s system has not linked the payments to the financing account, making it appear as if customers have not paid.

This meant that these customers were marked as missed payments, which could impact their credit rating and their ability to apply for credit in the future.

A customer complained that he had not heard from Klarna for more than two weeks after reporting that his payments were not showing up.

“Just ignoring my messages is not good service and customer support,” they said.

Another user added: “I messaged Klarna twice saying there was a problem with their payments. It would be helpful if they reached out to those affected.”

When Klarna became aware of the problem, the company said it stopped reporting payment information to credit reporting agencies such as Equifax and TransUnion.

However, The Sun understands that some customers’ credit files have already been affected.

Klarna is currently in the process of manually correcting these credit files. This should be completed by the end of this week.

However, any customers who have applied for a loan in the last few weeks – for a mortgage, for example – could have been refused credit due to this incorrect information.

Consumer campaigner Martyn James said: “I expect Klarna to correct all credit files immediately and then inform all affected customers that the matter has been resolved.”

“Compensation may also be due if someone has been rejected for a loan based on an incorrect credit file.”

A Klarna spokesperson told The Sun: “We very much regret the inconvenience caused to a small number of customers by using one of our legacy financing products.

“The issue will be resolved before the next payment date in early December.”

“We are taking steps to ensure this issue does not leave a mark on credit files. Our other payment products, including BNPL and Pay Now, are not affected.”

Klarna has another regulated financing product called “Term Loan” which only covers one purchase. This is not understood to have been affected by the technical issue.

What should I do if I discover an error on my credit report?

It’s a good idea to check your credit report regularly so you can catch errors early before they negatively impact your credit score.

If you notice a late payment on your report and believe it is an error, contact the company that reported the late payment and the credit reporting agency as soon as possible.

There are three major credit reporting agencies: Experian, Equifax and TransUnion.

You must check your report with all three companies and contact each one if you discover an error.

Once you have reported an error, you should contact the company and ask them to remove the error from your records if it is inaccurate.

In the meantime, you can ask to include a “notice of correction” with your report stating that you dispute the error.

When you apply for a loan, lenders may see this notice and it may help in their decision.

It’s a good idea to also notify the lender of the error and let them know that you dispute it.

How to contact each credit reporting agency:

  • Experian: Email or call 0115 828 6738
  • Equifax: Email or call 0800 014 2955
  • TransUnion: Email or call 0330 024 7574

You can also complain to retailers if you feel like their mistakes are putting you at a financial disadvantage.

If you get stuck or are unhappy with the resolution, you can use an alternative dispute resolution system like Resolver to contact them on your behalf.

You can also join our new Sun Money Facebook group to share stories and tips and engage with the consumer team and other group members.

John Verrall

John Verrall is a Nytimas U.S. News Reporter based in London. His focus is on U.S. politics and the environment. He has covered climate change extensively, as well as healthcare and crime. John Verrall joined Nytimas in 2023 from the Daily Express and previously worked for Chemist and Druggist and the Jewish Chronicle. He is a graduate of Cambridge University. Languages: English. You can get in touch with me by emailing:

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