With all of the various purchasing methods available, the "buy now, pay later" option is rapidly gaining traction among consumers. This payment model is changing shopping habits and has provided an attractive alternative to traditional credit, according to Consumer Lending.

You've likely seen how it works. You are online shopping, you put your items in your cart, and when you checkout, there is an option to "buy" the item now or pay for it later. Your credit is run, and you get approved, but while you are making payments, many companies are not reporting it to the credit agencies.

Buy now, pay later is a short-term, interest-free credit option available both online and in physical stores. Historically it has not shared user information with credit reporting companies, which could affect borrowers trying to build credit through timely payments. Credit reporting agency TransUnion announced the results of a new survey of U.S. consumers using the buy now, pay later option. 

"Eighty percent of consumers that used buy now, pay later are using them more than once a year," said Liz Pagel, senior vice president for Consumer Lending. "So we had to make a lot of changes to make it report to the credit agencies and reflect the positive behavior and not penalize the consumers for how often you're using the product. We should be able to reflect those loans over the next year."

How much do these short-term credit options affect your credit score? Pagel says it is too early to tell as more data is needed. She also mentioned that the buy now, pay later option can be an effective way to start building credit history as long as you are making on-time payments and the history is being reported. This will allow consumers to establish a track record of on-time payments, which is crucial for improving creditworthiness. 

Pagel also says the most popular installment options are those that allow customers to pay 25% in four payments at 0% interest.