Afterpay can be a quick and easy way to buy the things you need without copping the full brunt of their cost on your hip pocket straight away. However, before you start using services like Afterpay, it’s worth finding out whether doing so can have a negative effect on your credit score. Learn more about how these services work and if they leave a black mark on your credit file right here with Savvy!
Firstly, what is Afterpay and how does it work?
Afterpay is one of the largest buy now, pay later (BNPL) services operating in Australia. These services enable you to purchase a product or service upfront from a participating retailer and repay the amount to your BNPL provider in instalments over a short period, usually in four instalments over two to six weeks.
The main benefit of using these services is that you don’t have to pay any interest on your repayments or, in some cases, any fees. However, many BNPL providers do charge certain fees for using their service.
For example, signing up for Afterpay Plus, which grants you access to a Mastercard, costs $9.99 per month. Additionally, making a late payment with Afterpay could set you back up to 25% of your purchase price, capped at $68.
Other BNPL providers charge more extensive fees. Before humm retired its BNPL product, it charged an establishment fee of $30 to $110 for using the service for the first time and $29 for each purchase made thereafter. This was in addition to an $8 monthly fee for being signed up for the service and late fees of up to 18% of your purchase price, up to $78.
Will using Afterpay affect my credit score?
Yes – all Afterpay applications and some applications for spend limit increases will now be recorded on your credit file and can affect your score. As of 10 June 2025, all BNPL services (including Afterpay) will be subject to stricter regulations that require them to hold a credit licence and become members of the Australian Financial Complaints Authority (AFCA). Part of this new legislation means that BNPL services must now conduct credit checks when assessing applications, which Afterpay has said it will comply with.
Prior to this update to regulations, using Afterpay didn't have any impact on your credit score. Unlike other credit providers like personal loan and small loan companies, Afterpay and other BNPL services didn't have to conduct any credit checks or report positive or negative repayment behaviour to credit reporting agencies. Some BNPL companies did this anyway, though.
How can I use Afterpay responsibly?
There are many ways you can go about responsibly using your Afterpay account. According to independent financial information site CreditSmart, some of the tips you can follow when using BNPL are:
- Don’t make BNPL payments at the expense of other, more important debts, like your mortgage or credit card payments
- Enforce a limit on your BNPL usage and wind it back if you’re approaching your limit
- Consider linking your account to a debit card, rather than a credit card
- Make payments on time to help maintain a positive credit record, as well as avoid late payment fees adding up over time
- Don’t spend more than you can afford to comfortably repay
What are the pros and cons of using Afterpay?
Pros
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No interest or fees
If you make all your repayments on time, you won’t have to pay any interest or fees on your purchases.
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Fast access to funds
BNPL is a quick and easy way of accessing the cash you need to buy goods and services.
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Paying at your own speed
Splitting up the cost of purchases can make it more manageable to pay for them.
Cons
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Potential for steep late fees
If you make late payments, these can cost you up to $68, depending on the size of your purchase.
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Temptation to overspend
It’s easy to overspend with BNPL services, so it’s important to keep a firm eye on your budget.
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Credit impact
Applying for Afterpay as of 10 June 2025 means it can’t offer “no credit checks”, taking away one of its key selling points.
