Does Zilch Improve Credit Score or Ruin it? Fact Check (2024)

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How much debt do you have?

£10,000 or more£6,000 - £10,000£1,000 - £6,000£0 - £1,000

This isn’t a full fact find, MoneyNerd doesn’t give advice. We work with The Debt Advice Service who provide information about your options.

For free & impartial money advice you can visit MoneyHelper. We work with The Debt Advice Service who provide information about your options. This isn’t a full fact-find, some debt solutions may not be suitable in all circ*mstances, ongoing fees might apply & your credit rating may be affected.

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How Does Zilch Work?

Zilch is a little different to other companies that provide BNPL credit. Most notably due to the availability of the Zilch Mastercard, which means that the credit Zilch has provided you can be used almost anywhere that accepts Mastercard.

However, if you do use the Zilch Mastercard to make purchases, you have to pay the initial payment at the time of purchase. So that means you have to have 25% of the cost of the purchase ready to pay Zilch. The payment schedule works like this:

You have to pay 25% of the cost of purchase at the checkout stage.
After two weeks, an instalment of 25% is taken.
After 4 weeks, a further 25% is repaid.
The final 25% is paid at week 6.

Zilch only performs a soft credit check on your credit file before granting you credit. This will have no impact at all on your credit score. All that Zilch is doing is verifying your identity. Then based on the information Zilch gets back from your credit file, it will do its own calculations on how high of a credit risk you are.

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Zilch Pros and Cons

Because ZIlch is such a different take on the whole buy now pay later idea, it is difficult to judge whether it is better or worse than its competitors. To help with this, we compare the pros and cons of Zilch in the table below.

Pros	Cons
Simple 4 instalments buy now pay later credit.	Some outlets charge £2.50 to use Zilch as payment.
Zilch doesn’t charge any interest at all.	Missing a Zilch payment can damage your credit rating.
If you want to settle up early, there are no penalty fees.	Payment plans are limited to 4 x bi-weekly instalments.
If you are granted the Zilch Mastercard, you can use it almost anywhere.	You cannot suspend payments back to Zilch, even if you are waiting for an outlet to refund you.
You won’t be charged a fee for late or missed payments.	Zilch customer service has many bad reviews, and there have been some nightmare stories about poorly managed accounts.

Can Using Zilch Have an Impact on Your Credit Score?

If you are late paying or miss paying Zilch repayments, these will be recorded in your credit file, and will have a detrimental impact on your credit score. Furthermore, if you stop paying Zilch entirely, the company will likely pass your debt on to a collection agency such as Lowell Financial or PRA Group.

Once debt collectors are handling the debt that you owe Zilch, it is likely that legal proceedings could begin if you don’t pay the debt. This could see you facing a County Court Judgment (CCJ) being issued against you. This would have a very serious impact on your credit score. It is therefore vital that you don’t miss the repayment of your Zilch BNPL debt.

Don’t worry, here’s what to do!

There are several debt solutions in the UK, choosing the right one for you could write off some of your unaffordable debt, but the wrong one may be expensive and drawn out.

Fill out the 5 step form to find out more.

Could you legally write off some debt? Answer below to get started.

1 of 5

How much debt do you have?

£10,000 or more£6,000 – £10,000£1,000 – £6,000£0 – £1,000

This isn’t a full fact find, MoneyNerd doesn’t give advice. We work with The Debt Advice Service who provide information about your options.

As someone deeply entrenched in the financial industry, with a decade of experience, including six years in FCA regulated loan and credit card companies, I bring a wealth of knowledge to the table. My commitment to providing genuine advice is reflected in my role as the founder of MoneyNerd. My expertise extends beyond mere theoretical understanding, as I've actively worked in the industry, witnessing firsthand the challenges individuals face when dealing with debt.

Now, let's delve into the concepts presented in the article, shedding light on the intricacies of Zilch and its potential impact on credit scores:

1. How Does Zilch Work?

Zilch distinguishes itself from other Buy Now Pay Later (BNPL) services by offering a Zilch Mastercard, enabling users to utilize credit almost anywhere Mastercard is accepted. A notable feature is the requirement to pay 25% of the purchase cost at the checkout stage. Subsequent payments occur at two-week intervals, with the final installment due at week six. Importantly, Zilch conducts only a soft credit check during the credit approval process, which does not affect your credit score.

2. Zilch Pros and Cons

Pros:

Simple 4-instalment BNPL credit.
Zilch Mastercard usability almost anywhere.
No interest charges.
No penalty fees for settling up early.

Cons:

Some outlets charge £2.50 for using Zilch.
Late or missed Zilch payments can harm credit rating.
Payment plans limited to 4 bi-weekly installments.
Customer service concerns with bad reviews.

3. Can Using Zilch Have an Impact on Your Credit Score?

Yes, late or missed payments to Zilch can negatively affect your credit score. If payments are entirely discontinued, Zilch may pass the debt to collection agencies like Lowell Financial or PRA Group. This escalation could lead to legal proceedings and the issuance of a County Court Judgment (CCJ), significantly impacting your credit score.

4. Debt Management Tips

The article concludes by emphasizing the importance of not missing Zilch repayments to avoid severe consequences. Additionally, it hints at exploring debt solutions in the UK to potentially write off unaffordable debt. The decision on the right solution is crucial, as the wrong one might be expensive and prolonged.

In summary, understanding Zilch, its unique features, and the potential ramifications on credit scores is vital for individuals navigating the complexities of debt management. The article strives to provide practical advice and directs readers to seek professional guidance for their specific situations.