When Will Afterpay Report to Credit Bureaus?

Buy now, pay later (BNPL) services like Afterpay allow consumers to divide purchases into smaller installments. Many users wonder how these services affect their credit. Understanding Afterpay’s credit reporting policies is important for anyone considering or using the service.

Afterpay’s Credit Reporting Practices

Afterpay’s approach to credit reporting varies depending on the type of service used. For its standard “Pay-in-4” product, Afterpay generally does not report on-time payment history to the major consumer credit bureaus, such as Experian, Equifax, and TransUnion. This means that consistently making payments on time for these purchases usually will not help in building a positive credit history.

However, Afterpay’s policies differ when payments are missed or accounts become delinquent. If a user fails to make scheduled payments, Afterpay may report these missed payments or defaults to credit bureaus, especially if the account is sent to collections. Such negative reporting can potentially harm an individual’s credit score. In contrast, Afterpay offers other products, like “Pay Monthly” plans, which function more like traditional installment loans. These specific plans may involve reporting both positive and negative payment information to credit bureaus.

Timeline for Afterpay Reporting

The company has publicly stated that it will hold off on supplying customer data for responsible payment behavior until there is clear evidence that such reporting would benefit, rather than harm, consumers’ credit scores. This stance reflects an ongoing discussion within the financial industry about how short-term BNPL products should be integrated into traditional credit reporting frameworks.

Despite Afterpay’s traditional approach, the broader buy now, pay later landscape is evolving. Equifax, one of the major credit reporting agencies, formalized a standard process for reporting BNPL services on credit reports in December 2021. This development indicates a growing industry movement towards incorporating BNPL data into credit files, though the specific reporting practices can still vary among different BNPL providers. While some BNPL services are exploring ways to report positive payment data, Afterpay’s standard “Pay-in-4” largely remains outside this positive reporting for now.

How Afterpay Data Impacts Your Credit Report

If an Afterpay account becomes delinquent or is referred to collections, this negative information may appear on a credit report. The presence of such negative entries, like missed payments or collection accounts, can significantly lower a credit score. A collection account, for example, can remain on a credit report for up to seven years.

Conversely, for its standard “Pay-in-4” product, Afterpay typically does not report positive payment history, meaning that on-time payments generally do not help build a credit score. However, Afterpay does perform a soft credit check when a user signs up for the service, which is a common practice that does not impact the credit score. This soft inquiry is used to assess eligibility and does not appear to other lenders as a traditional credit application would. While regular Afterpay usage for the “Pay-in-4” model typically does not contribute to building a credit history, the “Pay Monthly” option does have the potential to impact credit scores positively or negatively, as it operates more like a traditional installment loan.

Monitoring Your Credit Report

Regularly reviewing your credit report is a practical step to understand how various financial activities, including Afterpay usage, are being reflected. You can obtain a free copy of your credit report from each of the three major credit bureaus—Experian, Equifax, and TransUnion—once every 12 months through AnnualCreditReport.com. This allows for a comprehensive review of your credit file.

When examining your credit report, look for any entries related to Afterpay or other BNPL services. Pay close attention to payment history, account statuses, and any collection accounts that might be listed. If you identify any inaccuracies or information you believe to be incorrect, you have the right to dispute it directly with the credit bureau. Correcting errors on your credit report is an important part of maintaining financial health and ensuring your credit history accurately represents your payment behavior.