Yes, these kinds of BNPL credit (Buy Now Pay Later) could affect your credit report in Australia.
So, is it better to use Afterpay, ZIP, or neither? This guide offers best practices when using these services.
Table of contents:
- How Afterpay, ZIP and other BNPL credit work
- This is how Afterpay or ZIP could affect your credit score
- Tips for Responsible BNPL Usage
- Comparing Afterpay vs ZIP
- Before you sign up
- BNPL services and legislation (effective June 2025)
How Afterpay, ZIP and other BNPL credit work
Buy Now Pay Later (BNPL) services, like Afterpay, Zip, and Humm, have surged in popularity across Australia.
When you sign up for a new Buy Now Pay Later (BNPL) credit account, or you apply to increase your service, the credit provider must check whether the credit is affordable for you.
This means they look at your credit report (also known as doing a credit check) to see how you’ve managed loans and repayments in the past. This helps make sure you can comfortably manage the repayments without putting pressure on your finances.
This is known as a credit check, and it leaves a record on your credit report called a credit enquiry.
BNPL allows you to purchase goods or pay for services immediately while spreading the total cost over smaller installments.
BNPL services usually don’t charge interest, although they often charge late fees if you miss a payment. The BNPL providers make money from the transaction fees they charge the retailers and account fees
For example, if you buy some clothing from XYZ store for $100, the BNPL provider charge fees to merchants who offer the service, and late fees to people who don’t keep up with payments.
This is how Afterpay or ZIP could affect your credit score
When you apply for a BNPL service, the provider will perform a credit check. A single credit check won’t automatically lower a credit score. But, just like other credit such as credit cards and personal loans, applying for lots of BNPL services, or missing payments, can affect your credit score.
To explain more - Some BNPL providers may report whether you make your payments on time. If you pay on time, this can help build your credit history. But if you often miss payments, this could appear on your credit report. If you fall far behind on payments, a default may also be reported.
But remember, not all BNPL providers do this yet, but most other credit providers already report this information. Because BNPL is a type of credit, it is possible that BNPL providers may report your payments in the same way.
Note: Lenders may consider your BNPL credit when assessing your affordability for other types of loans (a car loan, home loan, etc.).
Tips for responsible BNPL credit usage
To avoid financial pitfalls and maintain good credit health, it’s crucial to use BNPL services wisely.
Before making a purchase, consider whether you can comfortably manage the repayments alongside your other financial obligations. If the answer is no, it’s better to wait or explore alternative options. Set up automatic payments or reminders to ensure you never miss a due date. This helps you avoid late fees and protects your credit report from negative marks. While it’s tempting to sign up for multiple BNPL services, having too many accounts can complicate your financial situation. Stick to one or two accounts and keep track of repayment schedules to stay organised. Using a debit card ensures that you aren’t just swapping the BNPL debt for higher cost credit card debt when your payments are taken out.. This can help you avoid interest charges and minimise financial risks. Create a budget that includes all your expenses, including BNPL repayments. Tracking your spending will help you identify areas where you can cut back and ensure you’re not overextending yourself financially. If you’re struggling to keep up with repayments, reach out to your BNPL provider. They offer financial hardship assistance programs designed to help customers get back on track.
When used responsibly, BNPL can be a helpful way to spread out the cost of a purchase with flexible payment terms. BNPL is still a type of credit, so it’s important to understand the risks and make payments on time. By staying informed and managing your repayments carefully, you can use BNPL without harming your financial health.
Comparing Afterpay vs ZIP
The best approach is to focus on what each provider requires from you and how their reporting or approval methods might impact your credit report.
BNPL provider |
How it works |
Late fees |
Other considerations |
| AFTERPAY |
They don’t charge annual fees to use their services. (afterpay.com). Pay in 4 installments over 6 weeks, interest free. (afterpay.com). Credit checks may apply. (afterpay.com) |
Late fees will apply if a payment is not made on time. Late fees are capped at 25% of the original order value. For amounts over $40, the first late payment will incur a fee of $10. For every 7 days the debt remains outstanding, a further charge of $7 will be applied. These fees are capped at the lower of 25% of the purchase price or $68. (afterpay.com) |
The Afterpay Plus subscription has a monthly fee of $9.99 (afterpay.com) and AfterPay late fees may also apply. |
| ZIP PAY |
Zip doesn't charge any fees when you open a ZIP Pay account, nor do they charge interest on your purchases. They offer flexible repayments and a credit limit of $350 to $1,000. (Zip) Monthly fee of $9.95 which does not apply if you pay the full balance on your statement before the due date. (Zip) Credit checks may apply. (Zip) |
Late fees will apply if a payment is not made on time. $7.50 (for the Zip Pay service). $15 (for the Zip Plus & ZIP Money services). These amounts will be charged 7 days after the due date. (Zip) |
They offer a range of services, each with different features such as loan amounts, interest rates and payment flexibility. (Zip) ● ZIP PAY ● ZIP PLUS ● ZIP MONEY ● ZIP PERSONAL LOAN |
Before you sign up
If you are considering using BNPL credit, do the following before proceeding.
Plan ahead
BNPL is credit, in the same way a credit card or personal loan is credit. Treat it like credit and understand that you have to make your payments like you would any other type of credit. Make sure you will be able to make the repayments and also meet your other repayment obligations.
Check the terms and conditions
Most BNPL credit will incur late fees if you miss a payment, and these can add up. You may also be charged monthly account-keeping fees and payment processing fees.
Scrutinise the repayment schedule
Assess the frequency and size of the repayments and make sure they are suitable for you. Some BNPL providers require larger repayments that allow you to pay off your loan faster, while others allow you to make smaller repayments over a longer period.
BNPL services and legislation (effective June 2025)
Changes were made to the law in 2025 which means that BNPL falls under the National Consumer Credit Protection Act – adhering to the same rules as credit card and loan providers. From 10 June 2025, BNPL providers must adhere to the same rules as credit card and loan providers. These changes aim to protect consumers while preserving the convenience BNPL services offer.
Key changes under the new legislation
If you need support, CreditSmart's financial hardship assistance page lists free resources. You can also call the National Debt Helpline (1800 007 007) for advice.
While the new regulations bring greater accountability, it’s still up to individuals to use BNPL responsibly. BNPL services can have a significant impact on your financial health, both positively and negatively.
When you use credit, which includes BNPL, and make repayments on time, it shows you’re managing your money well. This can help when you apply for things like a car loan or home loan in the future. With a clearer picture of your total debts, credit providers can check more accurately if the product or loan is suitable for you.
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