Credit Repair Solicitors

Does Afterpay Affect Credit Score?

Navigating Afterpay and Your Credit Score in Australia

If you’re looking to be approved for a new home or car loan, you might be wondering how Afterpay could affect your free credit report. This new buy-now-pay-later service is taking Australia by storm, but the effects on your credit aren’t widely publicised. If you’ve come to us for credit repair in Australia, it’s fair to want more information before taking on a new debt. We understand the importance of staying informed about your credit health, and we’re here to guide you through the ins and outs of this payment service.

What is Afterpay?

Afterpay is a popular buy-now-pay-later service that has revolutionised the way we shop. In essence, Afterpay is a short-term, small loan service you can use to break up payments for your non-essential shopping. Offering instant approval decisions, most Afterpay accounts start with a $600 spend limit you can use to shop at a variety of stores. With no interest, you’ll pay back this loaned money in 4 instalments. If you miss a payment, you’ll be charged a late fee and your spending limit may be decreased.

How Does Afterpay Affect Your Credit Score?

When used responsibly, Afterpay typically does not directly impact your credit score. Unlike traditional credit products, Afterpay does not report your repayment history to credit reporting agencies by default. As such, it shouldn’t appear on your next free credit report. According to their website:

“Your credit score can be impacted when somebody does a credit check on you or if you are reported as paying debts late; at Afterpay, we never do credit checks or report late payments.”

Confirm that your Afterpay purchases haven’t appeared in your history by getting your free credit report from Credit Repair Solicitors.

Can Afterpay Affect My Credit Score Negatively?

While Afterpay itself doesn’t report to credit reporting bodies in most cases at this stage, there are some caveats to consider. Late payments or missed instalments can have repercussions. If you fall behind on your Afterpay payments, it could lead to late fees and potentially being handed over to debt collectors. Often debt collectors will appear on your credit report, which may require credit repair services to remove from your Australian credit history.
Banks and lenders will often also enquire about your spending habits before approving you for a loan. Frequent purchases using Afterpay on luxury or big-ticket items may make it seem as though you don’t have sensible spending habits. It’s important to show banks and lenders that you only spend within your means. Remember, financial responsibility is key. Consistently meeting your Afterpay obligations ensures a positive financial track record and helps you avoid any unwanted dings on your free credit report.

Does AfterPay do a Credit Check?

As we mentioned earlier, Afterpay does not perform a traditional credit check when you make a purchase. This means your credit score won’t be impacted when you use Afterpay for that big purchase. Afterpay relies on its internal algorithms to assess your eligibility for a purchase.
However, it’s crucial to note that Afterpay may perform a “soft check”, which doesn’t affect your credit score. It’s merely a precautionary measure to ensure responsible lending practices.

Navigating Afterpay Responsibly

At Credit Repair Solicitors, we advocate for financial well-being, and that includes making informed decisions about the financial tools you use. While Afterpay can be a convenient and flexible way to manage your expenses, it’s essential to approach it with the same responsibility you would reserve for any financial commitment.
Remember to:

Budget Wisely

Plan your Afterpay purchases within your budget to avoid any financial strain.

Timely Payments

Always make your Afterpay payments on time to maintain a positive financial standing.

Regular Monitoring

Keep an eye on your credit report to catch any discrepancies or potential issues early on.

Get Credit Repair in Australia

When used responsibly, Afterpay can be a fantastic ally in your financial journey. Keep these insights in mind, and you can enjoy the perks of convenient shopping without credit score worries. In the near future by now pay later services will be performing enquiries on credit reports and will be able to default consumers.

If you’ve already got a few dings on your free credit report, it’s time to contact us for credit repair in Australia. Our expert team can remove the late payment history, paid and unpaid defaults, and damaging enquiries that you might incur from using other buy-now-pay-later services. Get started with a free quote.