In the UK, a number of shoppers who attempted to pre-order the upcoming Xbox Series X or Series S console received the bad news that not only were they unable to complete the pre-order process, but their credit score had taken a hit nonetheless.
Microsoft is offering a financing option for the Xbox Series X and Series S in the US, UK, and other countries. It spreads the cost of purchasing the new console over two years and includes a subscription to Xbox Game Pass Ultimate as well.
In the UK, consumers can sign up to finance their new console via Xbox.com or through two well-known video game retailers, GAME and Smyths Toys, who have been chosen to act as credit intermediaries. Financed through Klarna, one of Europe’s largest financing banks, consumers may access the Xbox financing option after passing a hard credit check, which publicly appears on a person’s credit report.
When Xbox pre-orders went live this past Tuesday, the websites of both GAME and Smyths Toys went down for as long as six hours and, when many prospective buyers finally got to the checkout process, they received a message that stock had been exhausted and their order could not be completed. This news came only after customers had already applied for financing and taken the hit to their credit.
To further add to the frustration, many shoppers refreshed the websites numerous times while trying to checkout, and this led to multiple hard credit checks appearing on their credit report, despite Klarna assuring consumers that this could not happen. The type of financing applied for, called a direct debit, does not negatively impact a person’s credit score. But multiple hard checks in a short period of time can be harmful because lenders interpret it as a sign that the consumer is in financial stress and desperately applying for credit.
The debacle caused a number of frustrated consumers to voice their concerns on Twitter, which caught the attention of Microsoft, and that company has since stated that it is attempting to sort out the situation with Klarna, GAME and Smyths Toys. Many customers have shared their fear that this new negative mark on their credit report might prevent them from qualifying for financing if they try to purchase the console at a later date.
Financing is not entirely new to Microsoft. The Xbox All Access plan first appeared with the Xbox One X and allowed consumers to pay for the console in installments, with the option to upgrade to the Xbox Series X when that console releases in November 2020.
Source: This is Money
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