What Is Layaway + How Does It Impact Credit?

Jul 9, 2019

Introduction to Layaway

At Life Designers, we understand the importance of financial planning and making informed decisions about your money. One concept that often arises in the realm of personal finance is layaway. In this article, we will delve into what layaway is, how it works, and its potential impact on your credit.

Understanding the Basics of Layaway

Layaway is a purchasing option that allows consumers to reserve an item and pay for it over time, typically within a designated period. Unlike traditional methods of payment, where you receive the product immediately, layaway requires you to make a series of payments until the total cost is covered. Only then can you take possession of the item.

The Process of Layaway

When engaging in a layaway program, you will select an item from a store's inventory and request it to be put on hold. The store will set aside the item for you, often marking it as "sold." You will then negotiate the terms of the payment plan, including the duration and frequency of payments.

Once the agreement is made, you will typically be required to pay an initial deposit, which is usually a percentage of the total cost of the item. This deposit guarantees your commitment to the purchase.

Over the agreed-upon period, you will make regular payments towards the item. These payments are usually fixed amounts and can be made weekly, bi-weekly, or monthly, depending on the store's policy. It is crucial to ensure that you meet these payment obligations on time to avoid any potential penalties or cancellation of the layaway agreement.

Benefits of Layaway

Layaway can offer several advantages to consumers who may not have immediate access to funds or who prefer not to use credit cards or loans:

  • Financial Discipline: Layaway encourages regular savings and responsible spending habits since you are committing to a payment plan.
  • Avoiding Debt: By paying for the item upfront in installments, you can avoid accumulating credit card debt or interest charges.
  • Securing Popular Items: Layaway allows you to reserve highly desired items before they sell out or become unavailable.
  • Price Lock-In: As prices can fluctuate over time, layaway protects you from potential price increases, ensuring you pay the agreed-upon amount.

Potential Impact on Credit

It is vital to understand that layaway itself does not directly impact your credit score. Since it doesn't involve borrowing money, there is no credit check performed by the store when setting up a layaway agreement.

However, it is essential to make regular and timely payments to maintain the agreement. Failing to meet payment obligations can result in cancellation of the layaway plan, potential fees, and damage to your relationship with the store. These consequences can indirectly have a negative impact on your creditworthiness.

Furthermore, if you choose to use a credit card to make layaway payments, the overall impact on your credit will depend on your credit utilization. It is crucial to keep your credit utilization ratio within a healthy range to maintain a positive credit score.

Seeking Professional Guidance from Life Designers

At Life Designers, our mission is to empower you to make sound financial decisions and achieve your financial goals. Our expert consulting and coaching services cover various aspects of personal finance, including credit management, budgeting, and strategic planning.

If you are considering layaway or have questions about its potential impact on your credit, our team of experienced professionals is here to assist you. We will provide personalized advice and guidance tailored to your unique financial situation.

Take control of your financial future with Life Designers. Contact us today to learn more about our services and how we can help you navigate the complexities of personal finance.


In summary, layaway is a valuable option for individuals who wish to purchase items without relying on immediate cash or credit cards. It promotes financial discipline, while safeguarding popular items and locking in prices. While layaway does not directly impact your credit score, it is crucial to meet payment obligations and carefully manage your overall credit utilization to maintain a positive financial standing.

Remember, at Life Designers, we are dedicated to assisting you in achieving financial success. Make informed choices and gain control of your financial life today!