Ellen Cibula
Written by Ellen Cibula Payments, Finance, and AI Expert: Learn More

Are you curious about BNPL services like Afterpay and how this service affects your credit?

This well-known payment option has revolutionized online shopping, but its effects on your credit rating might not be so clear.

My experience in finance and at a payment processor helped me gain insight into how the financial world works. As a result, I wrote this post to help you understand Afterpay and answer your question — does Afterpay build credit? In it, I explain what Afterpay is, how it works, and if using Afterpay will build or worsen your credit score.

In today’s digital age, understanding how different financial services affect your credit can make all the difference. So let’s jump into whether using Afterpay can help improve your credit standing or not.


In a nutshell, Afterpay does not build credit.

In some cases, where you miss payments, you may indirectly negatively affect your credit score.

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Understanding Afterpay

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In the ever-evolving finance industry landscape, Afterpay has emerged as a game-changer. This buy now, pay later (BNPL) service offers an alternative to credit cards and traditional loans by allowing consumers to make purchases online and repay them over time.

The rise in popularity of services like Afterpay is undeniable.

Famed investor Warren Buffet once said, “Price is what you pay; value is what you get.”

In this context, it can be argued that customers find real value in BNPL services like Afterpay, which offer convenience without adding extra costs associated with interest charges or late fees — provided they stick to their payment schedules.

Diving Deeper into How Afterpay Works

To use Afterpay’s model for online purchases, all you need is a bank account or debit card as a payment method in your Afterpay account. The total cost gets split into four equal payments spread across six weeks, with the first one due at the time of purchase.

This provides flexibility while keeping additional debt at bay. Once approved, there’s no waiting period before making use of its benefits, unlike other financial products out there.

Avoiding Interest Charges and Late Fees with On-Time Payments

If you’re a stickler for making timely repayments, then services like Afterpay can prove to be an ideal choice as they don’t charge any interest, provided you pay each installment on time.

However, if you miss a due date because of insufficient funds in your account at that time, then you might have to bear some additional costs, but these are capped according to Afterpay’s Terms & Conditions.

Credit Cards Vs. BNPL Services: Key Differences Explained

Borrowers often get confused between credit card debt and BNPL models mainly because both offer multiple payment options over extended periods.

The major difference lies within their operational mechanisms, whereas traditional credit cards work on revolving lines of credit with high-interest rates. But platforms like Afterpay allow you equal payments without levying any extra charges unless you have a missed payment.

key takeaway

Afterpay, a Buy Now, Pay Later service, is reshaping the finance industry by offering an alternative to traditional loans and credit cards. It provides convenience without extra costs like interest charges or late fees if payments are made on time.

Unlike credit cards that work on revolving lines of credit with high-interest rates, Afterpay allows equal payments over six weeks.

Understanding How Afterpay Works

Offering an alternative to conventional borrowing and credit cards, Afterpay lets you buy items online and pay them back in interest-free installments.

The Step-by-Step Process with Afterpay

To start using this payment option, you can select Afterpay at checkout when shopping from any participating retailer. You will need to enter some basic information for a quick eligibility check – think soft credit check rather than a hard one that could affect your credit score.

If approved, you can proceed with your purchase and set up installment payments divided into 4 equal parts spread out every two weeks from the date of purchase. These multiple payments are automatically deducted either from your debit card or account on each due date until all remaining payments are completed.

No Interest Charges With On-Time Payments

A standout feature of Afterpay is its no-interest policy if you strictly adhere to your scheduled repayment dates throughout your plan period. Unlike typical credit card companies that charge hefty interests against outstanding balances after the grace period, you won’t have any extra costs provided you pay on time for ALL payments.

Because these payments automatically charge your debit card or pull from your bank account, you just need to have money in that account at the time of the payment.

Late Payment Consequences

However, missing scheduled repayments may lead to late fees, depending on your agreement terms. However, there wouldn’t be added interest charges, unlike conventional credit cards, which often involve both late fees plus accrued interests against missing a payment.

To help avoid missing a payment, the company provides reminders before each due date so you don’t forget about them.

However, repeated instances involving late payments can potentially result in temporary suspension. This will limit access to future Afterpay services until the previous balance gets cleared off completely.

Determining Your Spending Limit

Your spending limit isn’t necessarily fixed like normal credit cards, where you have a pre-set total credit limit based on your financial profile. Instead, it varies dynamically across factors, including prior transaction history within the platform and the merchant.

key takeaway

Afterpay allows online purchases with interest-free installments. It requires basic information for eligibility and doesn’t charge interest if payments are on time.

However, late payments may result in fees and temporary suspension of services. Unlike traditional credit cards, spending limits aren’t fixed but vary based on factors like transaction history.

Does Afterpay require a credit check?

Afterpay performs what’s known as ‘soft’ checks.

A Soft Credit Check: What is it?

In contrast to hard inquiries, which are recorded on your report and can impact your score negatively if conducted too frequently within short periods, soft pulls or soft inquiries don’t affect your overall score. They’re primarily used for identity verification and initial eligibility assessment for services like those offered by Afterpay.

Differentiating Between Hard And Soft Checks

There are two types of credit checks — soft pulls (or soft inquiries) and hard pulls (hard inquiries). A quick glance at your own history or an employer conducting background research would be examples of instances where a soft pull might occur.

On the other hand, applications for traditional loans or opening lines with creditors such as banks could lead to more detailed examinations in the form of hard queries.

A landlord checking your rental history could be either a hard pull or a soft pull.

Rationale Behind Using Soft Pulls By Companies Like Afterpay

Firms like Afterpay use these kinds of non-invasive procedures not only because they align well with their business model but also because they are committed to responsible lending practices without causing potential harm to customers’ scores during the initial application stages. Their goal is simple – offer flexible installment payments while ensuring customer convenience.

The key element distinguishing this approach from conventional loan providers who charge interest rates based upon risk profiles determined through extensive checking procedures lies in its simplicity – providing equal installments over time instead of charging hefty interests.

Despite offering multiple payments spread across specific durations designed around each user’s needs, unfortunately, using BNPL solutions alone won’t necessarily affect credit scores.

Unlike typical cards issued via banking institutions, these transactions aren’t reported back individually, thereby limiting any possible positive impacts that would otherwise be available by consistently repaying on time, over long stretches, without fail.

key takeaway

Afterpay performs ‘soft’ credit checks for identity verification and initial eligibility, not affecting your overall score. However, using Afterpay’s BNPL solutions alone won’t necessarily boost your personal ratings, as these transactions aren’t reported to the credit bureaus.

Does Afterpay Build Credit?

The straightforward answer? No. But let’s see why.

The Connection Between Afterpay and Credit Reporting

Traditional loan providers such as banks or credit card companies usually report both positive and negative payment histories to major credit reporting agencies. This information forms part of your credit history, influencing your overall score.

Differently from these traditional loans or lines of credit that require hard checks on your reports affecting scores directly, Afterpay performs what’s known as a soft check – they verify some details about you but don’t make full-fledged hard inquiries that significantly affect your credit ratings.

No Direct Impact on Your Score

This absence of communication with main bureaus implies that regular payments through Afterpay will not directly impact improving (or hurting) one’s score. So even if all installments are made promptly without missing due dates for multiple purchases over time, responsible behavior won’t be reflected in boosting FICO figures.

Your payment history — late fees from missing your payments lower them while making consistent on-time payments improves them — plays an important role here, too, because it influences most people’s scores heavily. Unfortunately, Afterpay doesn’t relay either type back to the bureaus, so its use has zero effect here too.

Potential Indirect Influence On Your Score

While there might not be any direct benefits towards boosting your score by using their service offerings, still indirectly speaking, you could see benefits:

  • Fewer Hard Inquiries: If used responsibly instead of applying for new cards frequently, leading to hard hits against your profile, you can maintain your credit score.
  • Credit Utilization: Credit utilization scoring calculations use the total available balance across all revolving accounts versus how much debt is being carried at a given moment. A good credit usage score is 30%. Using services like Afterpay instead of revolving credit can help this score.
key takeaway

While Afterpay doesn’t directly build credit, as it performs soft checks and doesn’t report to major bureaus, using it responsibly can indirectly benefit your score by reducing hard inquiries and managing credit utilization.

What Happens if You Miss Payments?

Missing payments with Afterpay is not without its repercussions. You need to understand that Afterpay, unlike traditional loans or credit cards, doesn’t report missed payments directly to the major credit bureaus.

The real impact of missing an AfterPay payment lies within your relationship with the platform itself.

Navigating Your Account Post-Missed Payment

If you fail to make on-time payments for interest-free installments, expect a suspension of services until all remaining dues are cleared. This means any pending purchases will be put on hold, and late fees may apply according to their policy regarding missed installment repayments.

Tackling Late Fees and Penalties

A $8 fee applies initially when automatic payment fails due to insufficient funds in your bank account or debit card linked with AfterPay. If unpaid after 10 days from the original due date, another $8 fee gets added – capping at 25% of the initial order value.

This penalty structure encourages users to maintain sufficient balances but also manage spending limits responsibly to not risk accruing unnecessary charges through missed repayments.

Contact From Debt Collection Agencies

In extreme cases where multiple consecutive repayments remain outstanding despite reminders, then debt collectors could potentially start contacting you, seeking repayment on behalf of Afterpay. This can cause stress, besides potential damage to your financial reputation. Also, you have probably burned your relationship with Afterpay.

pro Tip

Don’t miss a payment.

If you have having problems making payments, contact Afterpay. They do have a hardship program if you fall on financial hard times.

key takeaway

Afterpay doesn’t report missed payments to credit bureaus, but there are still consequences. Your account can be suspended, and late fees applied if you miss a payment. In extreme cases, debt collectors may get involved, indirectly impacting your credit score.


Afterpay, a popular BNPL service, offers an innovative way to finance purchases.

Credit checks aren’t always part of the Afterpay process.

But does Afterpay help build your credit? Not directly.

Your credit score remains unaffected unless you miss payments.

I hope this guide helps you understand that Afterpay will not help you build credit, but it may indirectly affect it if you miss payments.

My best advice? Don’t miss any payments.


Afterpay can be beneficial if used responsibly. It allows you to split purchases into 4 interest-free payments, aiding in budget management. However, they may apply late fees for missed payments.

The amount of credit Afterpay offers varies based on individual circumstances and the retailer involved. There’s no set limit; it depends on your payment history and financial behavior.

No, Afterpay is not classified as a loan because there are no interest charges or revolving balances. It’s more akin to an installment plan with 0% interest, where you pay off the purchase price over time.

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