Do "buy now, pay later" lenders impact your credit score?

Do "buy now, pay later" lenders impact your credit score?

If you're using lenders such as Afterpay, you might want to know about your rights.

02 July 2019 · 2 min read

If you are carefully monitoring your credit score, you’re probably wondering whether signing up to a “buy now, pay later” lender (think Afterpay, zipMoney, etc.) will impact your credit score.

The short answer is… well, actually, there is no short answer.

Generally, if you apply for a new credit card or apply to open a new bill account (such as with an electricity or broadband provider), these service providers will make an inquiry into your credit report to ensure you’re worthy of their business.

So, it’s not unreasonable to assume that these “buy now, pay later” lenders would be doing the same thing. But basically, each of these current providers has its own way of doing things.

We looked at a few of the bigger names to break down what you need to know.


Afterpay seemingly burst onto the scene two years ago — in June 2017 to be exact — and to say the company has hit the ground running would be an understatement.

Currently, Afterpay reserve the right to check your credit.

But it's also worth noting Afterpay has developed its own proprietary technology that it uses to assess individual purchase applications. The ins-and-outs of how Afterpay assesses your application using this technology have not been made known to the public, but as per its terms and conditions, laid out below, it could involve running a credit check.

Afterpay’s terms and conditions state: “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 ordering a credit report, performing other repayment capability checks and verifying information you provide against third party databases.”

Beyond that, Afterpay have the right to sell on debt. In the past, Afterpay has hired a debt collection agency, but it has not taken anybody to court over uncollected debt. Regardless, if Afterpay was to sell your debt, it could impact your credit score.

ZipMoney + ZipPay (both by Zip Co)

Zip Co Limited is the company that offers ZipMoney and ZipPay.

Both products are fairly similar in that they offer interest-free lending accounts. These accounts can be used with retail partners and instore, anywhere Zip is accepted.

The differences between ZipPay and ZipMoney basically come down to the amount you can borrow and the type of fees, if any, you’ll be charged.

But what about credit score impact?

Well, regardless of the product, Zip Co says they “may need to perform identity and/or credit checks “to verify your details and confirm you can make repayments.”

It may also report to the relevant credit reporting body if you default on your repayments.

A final note: when a borrower applies for a loan, banks may look at the borrower's transaction history as part of their inquiries. While your "buy now, pay later" transactions may not impact your credit report, they could impact whether you're approved for a loan.

TLDR: Keeping your credit report in tip-top shape isn’t super hard, as long as you’re aware of the ins and outs. Make sure you pay attention to the terms and conditions any time you’re using a “buy now, pay later” lender and you shouldn’t be caught out.

The information in this article is prepared by Spaceship Capital Limited (ABN 67 621 011 649, AFSL 501605). It is general in nature as it has been prepared without taking account of your objectives, financial situation or needs.

Bryna Howes is the VP of Marketing & Brand at Spaceship. She's equally obsessive about cinnamon donuts and scouring the web for great reads.

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