Does Afterpay Affect Your Credit Rating Even if You Pay off Your Debt Early?

There's a heap of Afterpay deals on the front page of Ozbargain at the moment, one of which I wanted to buy (some speakers). I have no need for AfterPay but was thinking of signing up just for this deal.

What I don't want to happen is that Afterpay negatively affects my credit score. Does Afterpay have any adverse credit rating affects even if you pay it off straight away?

Edit: Thanks for the replies, it looks like it won't affect credit, but it will def affect the ability to get a loan in the future. Prob not worth it just to save a few dollars on a set of speakers.

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  • +1

    Straight from their website:

    Is using Afterpay bad for my credit score?

    1 month ago Updated

    Afterpay does not affect your credit score or credit rating. 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. We don’t believe in preventing people from accessing Afterpay because they may have had an old debt from a long time ago. And we don’t believe that missing a payment with Afterpay should result in a bad credit history - especially when the average purchase is only around $150 (which may surprise you). Our main aim is always to help you spend responsibly, and we take a lot of steps to help ensure this, including pausing your account when you miss a payment.

    • +1

      they would rather see you in debt with them to make $$$$

    • +23

      we never do credit checks

      Now that's what I call responsible lending.

  • +7

    While it may not affect your credit score, some applications for credit, loans etc might ask for whether you use BNPL services. Plus a lot of lenders are now using automated services that look over your bank accounts and can flag afterpay or other BNPL transactions.

    • +2

      What is there to stop you from just setting-up another account with another bank & paying BNPL through that account ?

      • Nothing, but a prudent lender would also want bank statements from account you are transferring money too

        • +1

          Every lender I have used has only asked for statements from the accounts my salary has been paid into and any credit card statements. They don't ask for statements from every bank account you have. I have multiple accounts across probably 6 banks in Australia, but all money goes into 1. I have had mortgages trough 4 different lenders in the last couple of years and none of them have asked for statements outside of my primary account.

          • @conan2000: Yeah, not sure how that relates to OP who appears to have no borrowing history and would be regularly transferring money from their primary account not transferring it into.

            Also not sure if you know the difference between prudent and every.

      • Legacy banks are pretty good at money laundering. They wrote the playbook on dodgy banking practices and can easily shot customers trying to do shady deals.

    • Yeah when I applied for a car loan last year they picked up my Zip account (which I had forgotten to disclose as I never use it).

  • +1

    Does it impact your external credit score? Most likely no as the credit bureaus can't see the enquiries.

    Will it impact your ability to borrow? Most likely yes, especially if you are trying to borrow from a bank where your transaction account is. Most banks worth their salt will be able to flag your BNPL transactions and will hold it against you in some way.

    • +1

      We recently went for a home loan with NAB
      We asked directly about BNPL and they said they do not care if you use them provided the repayments etc are within your capacity.
      Given that CBA and others are now launching their own BNPL services i think the attitudes towards them have changed, its about serviceability more than anything and if you use these services but still can service a loan it does not negatively affect your application.

      Saying that also, NAB did consider Gym Memberships and Pet Insurance to be "wasted discretionary spending:"

      • Lol do they have a category that specifically says wasted?

  • I have no need for AfterPay but was thinking of signing up just for this deal

    You don’t ne3d after pay to get the deals. You just need to apply the code.

    Which brings me to wonder why after pay is mentioned in deal title when it’s not required.

    • Well, it was required for me, as I don't have any ebay giftcards to get around the system.

      • buy from shop back's swap gift cards

    • Doesn't work… I tired to use the code yesterday with other payment methods and it said the afterpay option must be selected.

      • +1

        buy from shop back's swap gift cards

      • +1

        The afterpay option must be selected, but you don't actually need to pay with Afterpay. Use your gift cards as normal

      • every second comment shows people buying discounted ebay gift cards and using it.

  • +1

    From experience.. .
    Open a new bank account solely for the use for afterpay etc - close that bank account - refinance homeloan - reopen bank account and continue with afterpay and the like.

  • +1

    I would assume a lender would assess AfterPay the same as a credit card with the limit of your AfterPay account. It is however easy to pay with AfterPay, pay off the balance and then email AfterPay asking for them to suspend or close your account.

  • Hey, just to give you an answer No it wont reflect on your credit score but it will be considered part of your Monthly Expenses when going for a home loan. You can simple solve the issue like any credit card, zip pay etc. by closing the account and producing a pdf to the lender/ broker that the account has been closed.

    It isn't that big of an issue if you already have an account…

  • Merged from Afterpay question need bank staff please

    I’ve recently started to use Afterpay like many Aussies do, cuz many merchants has discount for Afterpay. The purpose is purely to get some discount. I always pay the full amount straight away.

    My question is, will that affect anything when applying home loan or similar stuffs in future?

    I saw some people here said it’s fine it doesn’t show in the personal credits record, while some people said it’s a dangerous move and may add risks when refinancing. So can someone working in banks reply to this issue? Thanks in advance.

    • +2

      Work at a Big 4 but not directly with lending or other credit products, but have researched a bit about this myself. Afterpay does specifically state on their site that they don't conduct credit checks on their customers so on that side you're clear, and thus using afterpay will bear no impact on your credit rating.

      When it comes to applying for home loans or other loans, something I'm in the process of doing myself, brokers and the bank will explicitly ask your current debts and liabilities (including unsecured products (e.g. CC's)). Afterpay would in this case constitute a unsecured product, and whilst it may not be uncovered in their credit checks, you'd have a duty to disclose the max $1000 limit available (or whatever it is now) to your lender when they assess you. Given the $1000 limit, most banks would be fine with letting you keep it but mindful that they may request you close the account (like CC's) before formal approval. However, nothing stops you from rejoining after the loan has initiated.

      • Thank you. So $1000 is the number I should bear in mind when using Afterpay.

        • Not an APT user, but $1000 was what I knew when I last looked at their product. What I meant by the $1000 disclosure, is that it is the maximum ‘borrowing’ limit that afterpay enables you to have. That amount will depend on your circumstances, so check your account for more details.

          Quick search now says limit of $500 for new customers, $800 for returning and $1500 for those linked to a credit card. Happy to be corrected on that as they were 3rd party sites.

        • I signed up for the sales on Friday, I got $600 limit. No idea how it's determined since they don't do credit checks.

      • Sounds like having a $1000 limit on after pay isn't that big of a deal really.. Most of the credit cards I use for hacking have minimum balances of $6000, of which I closed before getting my new mortgage. But still, if a $1000 'credit' limit is going to bring your borrowing capacity into question then the individual would have bigger problems

  • it doesn't affect your credit rating even if you don't pay them off — they are not a credit provider.

    • They can run credit check if they wanted to.

      (c) You authorise us to make, directly or through third parties, any enquiries we consider necessary to verify your identity and assess your capability to make payments according to the Payment Schedule in relation to all Afterpay Orders. This may include performing repayment capability checks and verifying information you provide against third party databases.

      They can also legally enforce the agreement in a Court.

      (b) By placing an Order with a Retailer and using our Products, you provide us with unconditional and irrevocable consent and direction to pay (or procure an Afterpay Affiliate to pay) the Retailer on your behalf in exchange for your agreement and obligation to repay or pay to us, as principal debtor, in accordance with this Agreement the agreed amounts (which may include any applicable taxes, duties or other related amounts charged by the Retailer) and on the dates outlined in your Payment Schedule, plus any additional applicable Fees, including Late Fees if you miss a repayment to us on or before the scheduled date, as set out in Schedule 1.