Buy now pay later (BNPL) schemes are offered by retailers and allow shoppers to spread the cost of a purchase.

One in five people used a BNPL scheme in the last 12 months, according to a study by ComparetheMarket – the equivalent of 10 million people across the UK.

However, a missed BNPL payment appears as a black mark on your credit report, potentially damaging your credit score – something two-fifths of people surveyed didn’t know.

Missed payments are visible to lenders on credit reports for six years and can scupper your chances of getting a mortgage, credit card or loan.

BNPL schemes appear to encourage borrowing, with two-fifths of shoppers admitting they spend more than they usually would without the scheme and more than half feeling a BNPL scheme had contributed to their increased levels of personal debt.

Young people seem particularly dependent on these schemes, with nearly a third of 25-34-year-olds using one during the past year. More than a third (39%) said using one had damaged their credit score.

John Crossley, head of money at ComparetheMarket, said: “The allure of buy now pay later is clear but these statistics show that such schemes are encouraging people into taking on more debt than perhaps they realise.

“Failure to pay outstanding bills can damage your credit score and result in a spiral of outstanding payments which could jeopardize important life milestones like buying a house. It is concerning that many of these schemes appear to be targeted at younger demographics.

“If you need to take on credit for essential purchases, there are cheaper and less risky alternatives available. Many credit cards offer 0% interest on new purchases, often for up to two years. It’s also worth checking your eligibility for credit by using a soft eligibility checker which won’t damage your credit score.”

According to the research, 35% of people would use a BNPL while 15% would opt for a credit card. One in ten said they chose a BNPL because they had reached their existing credit card limit.