Does Afterpay Affect Credit

Afterpay is a buy now, pay later service that lets shoppers split a purchase into four interest-free installments, often due every two weeks. For these Pay in 4 plans, Afterpay generally does not perform a hard credit check and does not report the account to the three national credit reporting companies: Equifax, Experian, and TransUnion. Because the account is not furnished to those companies, the plan typically does not appear on a credit report and therefore does not directly influence credit scores. This is a key distinction from credit cards or installment loans, which are usually reported.

Credit reporting companies compile information that creditors voluntarily furnish. Not every creditor reports to every credit reporting company, and not every financial product is included. A lender or service provider may choose to report only certain products or only when an account becomes delinquent. Afterpay states that its short-term Pay in 4 product is not reported, but some buy now, pay later providers do report longer-term installment products. Afterpay also offers longer-term options in some markets, and those products may involve a credit check and may be reported to consumer reporting agencies. The terms can change, so the specific product disclosure is the best source of current details.

If a Pay in 4 payment is missed, Afterpay may charge a late fee where permitted and may restrict the account. If the balance remains unpaid, Afterpay may transfer the debt to a third-party collection agency. Collection accounts can be reported to the national credit reporting companies by the collection agency or the original creditor. A collection account on a credit report is a negative item that can affect credit scores. Therefore, while the original Afterpay plan may not be reported, a resulting collection may be. This is a common path by which a buy now, pay later obligation can show up on a credit report.

Because short-term Afterpay plans generally are not reported, they typically do not influence credit scores in the way that a reported credit account does. On-time Pay in 4 payments are not usually shared with credit reporting companies, so they do not contribute to credit history. Meanwhile, missed payments that become collections can be reported. Consumers can review their credit reports from the three national credit reporting companies for free at annualcreditreport.com to see what is actually being reported. The absence of an Afterpay account is expected for Pay in 4, while a collection account would appear if reported.