Ask The Money Coach

Q: Can putting something on layaway hurt my credit score?

A: I don’t see how a layaway plan can help or hurt a consumer’s credit — mainly because no credit or loans are being provided.

With a credit card, you charge what you want, take immediate possession of the merchandise, and then pay the bill AFTERWARDS. In other words, you’ve been granted credit which allows you to take something today that you haven’t yet paid for. But with layaway it’s the exact opposite. You put up cash and make small incremental payments BEFORE taking possession of your purchase. You only get your merchandise when its paid in full. So no credit is extended to the consumer.

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