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Like any other credit providers, using buy now pay later (BNPL) services can affect your credit score, but this will depend on which service you use and how you use it.
Which BNPL providers can affect your credit score?
There are 2 main ways using a buy now pay later provider can impact your credit score:
1. If it performs a hard credit check 2. If it reports late or missed payments
When you apply for a credit product, the provider will normally perform either a soft or hard credit check before it approves you. A soft credit check will not show up on your credit report and won't affect your credit score, whereas a hard credit check can.
The other way a BNPL provider can affect your credit score is if you fail to make a payment by more than 14 days.
Some BNPL providers will report these missed payments to the credit reporting bureaus that calculate your credit score. Any missed payments that are recorded on your credit report can also damage your score.
For example, Afterpay does not perform a hard credit check when you apply and won't report late payments, so using Afterpay won't affect your credit score.
However, other BNPL providers may perform hard credit checks or report missed payments, both of which can have a negative impact on your credit score.
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. Afterpay also won't report late payments to the credit report bureaus, which means if you miss an Afterpay payment, it won't appear on your credit report and won't impact your credit score.
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.
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 an eye on your credit score if you want to use Zip.
You shouldn't have any issues as long as you're responsible with Zip and are making payments on time.
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.
Why you should stay on top of your credit score if you're using BNPL
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.
Stay on top of your credit score.
Track every change to your credit score and get regular updates with the Finder app. Pop in your phone number below to get your download link.
Elizabeth Barry is the lead editor for Finder. She has over 10 years' experience writing about a range of topics with a focus on personal finance. You’ll find her writing and commentary in a range of publications and media including Seven News, the ABC, MSN, the Irish Times and Singapore Business Review.
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