Afterpay and Your Credit Rating

Icant Isimplycant on 15/08/2019 - 11:41
Last edited 16/08/2019 - 18:57 by 3 other users

Hey all,

I just wanted to make this known because it at least changed my opinion of Afterpay.

I have a friend who is a debt collector and he said that even if you simply make an account with Afterpay, regardless of how you pay it off (or even if you don't use it), it will put a negative strike against your credit score for a year or two. He said that this is due to Afterpay being a high-risk system.

Obviously it will affect your credit score if you forget payments, however I wasn't previously aware that simply making the account will, also. This is the same with credit cards - you don't even need to get approved for one, simply beginning the process with a bank will negatively affect your score.

I haven't been able to find more info on this specifically, but I just wanted to put it out there.

If I have this completely incorrect then please tell me and I won't let him live it down ha ha.

Happy bargaining.

Mod: Please note that this information above is reported to be incorrect, see discussion.

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Comments

  • WoodYouLikeSomeCash on 15/08/2019 - 11:43
    +1

    Thanks for the info

  • HighAndDry on 15/08/2019 - 11:52
    +2

    Thanks for the info, but at least the fact that credit card applications will negatively affect your credit score is fairly common knowledge.

    And yes, common sense says this will also apply to Afterpay because even if it's not legally (technically) credit, it serves effectively an identical purpose: allowing the customer to buy things they can not (or at least are not) paying for outright.

    It's a risk-indicator, so it operates the same as say, insurance. If a lot of people who use Afterpay have bad credit, that becomes an indication of bad credit the same way that buying a high-powered sports car (or a ricer) will mean higher premiums, because those cars and risk have a correlation.

  • lbsyc on 15/08/2019 - 11:54
    +1

    Is just afterpay? How about Zip pay

  • Typical16-bitEnjoyer on 15/08/2019 - 11:55
    +19

    I'm sorry but your friend is wrong.

    Afterpay is exempt from the National Consumer Credit Protection Act. Afterpay do not conduct credit checks. Afterpay do not report to credit reporting agencies unless you default entirely.

    Anyone here with a free credit report and Afterpay can look at it themselves. There will be no mention of Afterpay on it.

    • Okayy on 15/08/2019 - 12:00
      +5

      Yes, they didn’t check your credit profile or score so unless your default I don’t see a reason. Maybe OPs friend is just being a debt collector.

      • Typical16-bitEnjoyer on 15/08/2019 - 12:02

        Precisely. Debt collectors don't deal with credit scores anyways. They collect debt. Not check credit ratings and offer more.

        • scrambledeggs on 15/08/2019 - 12:39
          +1

          They must be able to figure it out somehow. I applied for a home loan about 6 months ago, and they knew about an AfterPay account my girlfriend had created and never used 2 years earlier.

          • j4ice on 15/08/2019 - 13:04

            @scrambledeggs: The most likely source of that information is the bank account/credit card statements linked to the AfterPay account, especially if your loan application is with the same bank. I'd imagine it wouldn't be hard for them to flag a payment or even account confirmation deposit linked to a vendor account.

            • scrambledeggs on 15/08/2019 - 14:48
              +1

              @j4ice: AfterPay was never used, just set up - and different banks.

        • Dingding1988 on 15/08/2019 - 12:46

          Coming from a debt collecter every debt ive had to deal with ive had to also get their credit check done to confirm details of said person. Not to look at their score rating but every debt paid and unpaid will appear on that document. Every knock back from loans etc. We use equifax which used to be known as Veda.

          • Typical16-bitEnjoyer on 15/08/2019 - 15:17

            @Dingding1988: Sounds unusual. Why would you care about their other debts? What details exactly would you confirm from a credit check? There's not a whole lot there for you to use.

    • sghetti on 15/08/2019 - 13:26
      +2

      I'd say the issue here will more be when you apply for personal loans/home loans. They'll want to see savings/transactions, they'll scour through your transactions looking for expensive stuff and other red flags. Having lots of transactions coming out for Afterpay and Zippay will be a big red flag.

    • HighAndDry on 15/08/2019 - 13:55

      I think sghetti has the right of it - when you're applying for a home loan, the bank will ask for your bank statements to substantiate your expenses and income. If they see "Afterpay" mentioned, that could (understandably) affect your creditworthiness.

    • cloudy on 15/08/2019 - 15:32

      Hi zeggie,

      Interested in your reply to those who have had AP accounts set up and not used, but coming up during credit approval applications like scrambledgeggs example.

      I’d like to think what you said make sense, but I have a feeling there is something you might be missing (that you’re aware of obviously)

      • Typical16-bitEnjoyer on 15/08/2019 - 16:48

        That's for those posters to answer. I can't explain it for them. Simple thing is, Afterpay won't show on your credit report until you default. Anyone here can corroborate that. We can't verify what those posters are claiming.

        If a bank knows it's probably because you've provided that information to them somehow at some point. On an application, on bank statements etc. Keep in mind quite a few major banks operate an online portal that allows you to give them digital access to your bank records. You're giving them access to practically everything. They will also review all old applications and docs provided on file as well. If you disclosed it on a credit card application 2 years ago, they'll 99% check that old application and compare it to your current application for a mortgage.

        All banks have their own internal algorithm and method for approving applications that not even the bank rep you're dealing with will know. Next to no chance the bank rep will know Afterpay (or anything specific) causes your application to not be approved. They keep it secret so nobody can "game" their system.

  • sw0rdy on 15/08/2019 - 12:25
    +2

    you have it completely incorrect.

  • [Deactivated] on 15/08/2019 - 15:20

    Hey look! A flying pig!

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