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Does Afterpay, Zip or Openpay affect your credit score?

While buy now pay later services can work in your favour, have you thought about how they could affect your credit score?

Elizabeth Barry
Elizabeth Barry

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Services such as Afterpay, Zip and others are an extremely popular way to buy online these days, but there could be some more risks you might not have thought about before (and not just late fees). Could using buy now pay later services affect your credit score later down the track? Let's break this down for you.

What's in this guide?

Does Afterpay affect your credit score?

There is no credit check before you sign up for Afterpay and using it won't affect your credit score, but it does reserve the right to check your credit and can report any negative activity on your account to credit reporting agencies. This could leave you in a tight spot later down the line when applying for more significant loans, like a mortgage. But it's up to Afterpay if it chooses to pass on this information to third parties.

As long as you're using Afterpay in a responsible way and making your payments on time, then your credit score and history shouldn't be affected directly.

Afterpay logo

Does Zip Pay affect your credit score?

Zip Pay affects your credit score if you don't pay your bills on time or default on your repayments. It will also check your credit score when you apply for the service, so it's important to keep it in a healthy shape if you want to use it. You shouldn't have any issues as long as you're responsible with Zip and are making payments on time.

Zip pay logo

Does Zip Money affect your credit score?

Owned and run by Zip, the same company as Zip Pay, Zip Money operates similarly but is used for larger purchases over $1,000. As such, the same rules apply here. It will run a credit check to make sure you're safe to lend to and your score should only be affected if you miss your payments.

Does Openpay affect your credit score?

Yes, when signing up for an Openpay account, it will verify your ID, check your credit history and obtain a credit report to assess your creditworthiness. Openpay reserves the right to check your credit score at any time at its discretion and this usually happens when you change the limit on your Openpay account. And of course, if you fail to make a repayment or commit a serious credit infringement, Openpay can disclose this information to a credit reporting body.

Openpay logo

Which companies can affect your credit score?

Want to know how all these buy now pay later services compare? We've broken them down into a handy little table below:

Payment providerDoes it affect your credit?What do its terms and conditions say?
Afterpay
  • No

Afterpay reserves the right to check your credit but generally doesn't

  • When you apply you authorise Afterpay to verify your identity and assess your capability to make payments*
  • If you don't repay, Afterpay reserves the right to report any negative activity e.g. late payments, missed payments, defaults or chargebacks to credit reporting agencies*
Openpay
  • Yes

Openpay may check your credit report

  • When you apply it may obtain a credit report and assess your creditworthiness**
  • If you don't repay it may be entitled to disclose this to a credit reporting body**
Certegy Ezi-Pay
  • No
  • Certegy doesn't send your account information to a credit reporting body
Zip Money
  • Yes

Zip Money will check your credit when you apply

  • Zip Money will check your credit report when you apply~
  • If you default on your repayments, Zip Money will report this to the relevant credit reporting body~
Zip Pay
  • Yes

Zip Pay will check your credit when you apply

  • When creating an account, Zip may perform identity and/or credit checks to verify the customer and their ability to manage payments****
  • Payment defaults will be reported a relevant credit reporting body~
Lombard Finance (including CreditLine and Once)
  • Yes

Lombard Finance will check your credit when you apply

  • Where the Privacy Act permits, Lombard Finance is "permitted to disclose your credit information to CRBs" for a number of purposes outlined in its privacy policy

What are the risks of companies like Afterpay and Zip?

If you're responsible with your payments and make them on time, you shouldn't have many issues with Afterpay, Zip, Openpay and other buy now pay later services.

But if you miss a payment, this could come back to bite your credit score. A lower credit score might impact your ability to take out a loan, mortgage or credit card. Don't worry too much, because there are ways to repair it.

If you do miss a payment, also keep in mind late fees can stack up quickly. So before you pay through one of these services, just make sure you're definitely able to make the payments. The shoes can wait!

Which is the least likely to affect your credit score?

There's no set service that is least likely to affect your credit score as all of these will penalise you if you don't make your repayments. It then just comes down to a matter of preference.

Afterpay might be easier to sign up with initially as it doesn't require a credit check when you apply.

On the other hand, Openpay might suit you better as it offers more flexibility with your repayments. Instead of Afterpay's schedule of 4 repayments over 8 weeks, Openpay's repayment plan ranges from 1–24 months depending on your purchase. You can even reschedule payments as you go to avoid late fees.

The bottom line is that any of these services can work in your favour, providing you use them responsibly and within your budget.

Do banks look down on services like Afterpay?

Ah, the great debate.

While it all depends on the lender, the individual person and their own personal financial situation, these buy now pay later services have raised some concerning red flags for lenders as it could be seen as an ongoing expense.

It might also give the impression that you don't have enough cash on standby and are living paycheque to paycheque, which may make it harder to get a loan.

Keep in mind that it's only one part of what lenders look at. So if you've got a good savings history, stable income and a good repayment history, you might still be able to win them over.

Why you should stay on top of your credit score if you're using Afterpay

Regardless of which buy now pay later service you choose to sign up for or not, it's always important to stay on top of your credit score. If you use any of these services, your credit score may start to reduce without you even noticing. But by downloading the free Finder app, we'll give you monthly updates and let you know if your score changes.

Credit score in the Finder app

Want a better way to check your credit score?

Banks know your credit score, so why shouldn't you? The Finder app updates your score automatically each month and lets you know if it changes. Pop in your phone number below to get your download link.

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Dig in deeper with our credit score and BNPL guides

Picture: GettyImages

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