Does Afterpay Affect Your Credit Score

Afterpay Limited (also known as Afterpay) is an Australian financial company that offers a “Buy now, pay later” service. The company operates in Australia, the United Kingdom, Canada, the United States, and New Zealand. It started its operations in 2014 and is one of the biggest financial companies in the United States that offers installment payments. But does Afterpay affect your credit score? We shall be checking later if the service affects your scores so that you can know how to deal with it.

The institution has made a lot of developments since the start of its operations. In June 2017, it merged with Touchcorp, one of its technology suppliers, to form the Afterpay Touch Group. Later in 2019, the firm got the name Afterpay Limited. In August 2021, Afterpay and Square announced that they had entered into an agreement that allowed Square to acquire Afterpay for US$29 billion. The acquisition process ended on January 31, 2022.

Up to date, the company continues to offer its services to the people who want to pay for commodities in installments. The ‘buy now pay later’ program is usually good as it allows you to get goods that you cannot afford at once and then settle later. It acts as a type of loan, although not specifically a loan. The total payments are higher than the one-time price, and businesses profit from that. The service is also known as hire purchase. 

How does Afterpay work?

Afterpay provides a “pay later” service that allows you to purchase a product in-store immediately and online and pay later with four equal fortnightly installments. The repayments are interest-free. However, if you don’t repay on time as per the agreement, you must part with late fees of $10 per indiscretion every two weeks.

When using the company’s services, you shop with one of their stores by looking at their Shop Directory and choosing Afterpay as your payment method when checking out. If you are a first-time customer, you must create an Afterpay account and get an instant approval decision. When you come back as a returning customer, you will only need to log in to make your purchase.

If you make an online order, the retailer will ship the commodities to your place after checking out. You should download the Afterpay mobile app and follow the in-app instructions to set up your Afterpay Card when doing in-store shopping. You can use the card with Google Pay, Apple Pay, or Samsung Pay to make payments at checkout.

The payment system allows you to pay 25% of the commodity’s total cost at the time of purchase and take your item home the same day. You will complete the rest of the payments later.

You can sign in to your profile at Afterpay to see your payment schedule and make a payment before the due date. Otherwise, the company will automatically take the money from your debit or credit card on your payment due dates. Remember, you do not need scores to get the card. It is like the secured credit card whereby you get approved for a credit card with no credit check.

How to open an Afterpay account?

does afterpay affect your credit score

You have seen that you require an account with the platform to enjoy the company’s services. You can start by downloading the Afterpay mobile app and following the prompts to sign up and begin shopping immediately. Within the app, you can shop and checkout with Afterpay in-store. The platform offers a personalized shopping experience to help you manage your orders.

You need to add the Afterpay Card to your digital wallet after downloading the app and creating your profile for in-store shopping. When shopping online, you can check out with Afterpay even if you do not have an account yet, so long as you provide the payment method. Once they approve your first order, your account is created.

How to qualify for Afterpay?

Not anybody will start using the services as you have to qualify first. When getting the secured credit card for rebuilding credit, you always have to produce the deposit amount. The following are the ways you can qualify for Afterpay.

  • Have at least 18 years old (19 years old in Alabama or Nebraska);
  • Be a United States resident living within one of the US states or the District of Columbia;
  • Have the capability to enter into a legally binding contract;
  • Own an active email and mobile telephone number;
  • Have a valid delivery address in the US;
  • Be authorized to use the provided Payment Method (should be a US-issued debit or credit card)

How does Afterpay affect your credit score?

If you think that Afterpay will affect your credit scores, especially when you repay your installments late, you can rejoice since that is not the case. Afterpay does not interfere with your credit score or credit rating. Your scores can only shake when someone or a company contacts a hard inquiry.

Afterpay does not do hard credit checks or report late payments to the credit bureaus. They believe that people should access Afterpay services irrespective of old debts with financial institutions. Also, if you miss a payment with Afterpay, they do not report you for negative listings whatsoever. They usually push you to clear your debts by pausing your account so that you cannot add more debts.

Does Afterpay contact a credit check?

The company may conduct a soft credit check if you are a new customer when you first sign-up to use the service. The soft credit pull doesn’t affect your overall credit score. Soft credit checks are also called soft pulls or soft inquiries and do not affect your credit scores. That means other lenders will not see the inquiries, nor will the credit bureaus enter the details in your credit report.

You may wonder why the company pulls a soft credit check. The main reason is to support their customers in making the right financial decision. Soft credit checks ensure that the initial spending limit is right for you as a new customer so that you do not end up straining your pockets.

Can I use a secured credit card on Afterpay?

The company allows you to use debit or credit cards on your account to fund your transactions. Therefore, it does not matter which type of card you use since all the cards are suitable for payments. You might be wondering what a secured credit card is.

A secured credit card is a borrowing card that allows you to deposit security to get it. Usually, the cards help applicants to grow their credit scores. The security deposit you make allows the card issuer to recover their funds if you do not repay your debt as per the agreements. The importance of a secured credit card is to help you grow your credit scores.

When you gain substantial scores from your card issuer, you qualify for the unsecured credit card. Your security deposit then becomes available in your checking account for use. One of the differences between secured and unsecured credit cards is that secured credit cards do not require credit scores while unsecured cards require credit scores. 

How do you get a secured credit card?

You must apply online or at a physical store to get the card. When you apply for the card online, you have to provide all the details. You should also deposit money in the card account online from your bank account or another payment card. Applying at a branch requires carrying your documents and deposit to get your card. You should fill out your details in a form when applying for the card.

You can get your card the same day you apply at a branch or receive it at your address several days later. Also, when you apply online, you can get the card at the physical address you provide during the card application. After getting your card, you then activate it for use.

 How long can it take to build credit scores with a secured credit card?

There is no specific time after which your scores will have shot up. It all depends on your card usage. Financial experts suggest that you see changes in your overall scores after around six months of credit usage.

To grow your scores fast, you should pay your debts on time. Usually, you should pay your debts at the end of every month. Also, you should spend far below the credit limit. Financial experts recommend that you use 30% of your credit limit to be on the safe side.

Do secured debit cards accept balance transfers?

Secured credit cards allow you to transfer the balance to another credit card. You can also move your balance from another card to a secured credit card with good features. The best balance transfer credit cards for fair credit usually allow you to enjoy a 0% introductory APR to finish repaying your debt. Introductory APRs can go for a few months to two years.

Bottom line

Afterpay Limited (also known as Afterpay ) is an Australian financial company that offers “Buy now, pay later” services. The company operates in Australia, the United Kingdom, Canada, the US, and New Zealand. To start using the service, you have to create an account online as long as you meet the eligibility guidelines. Once you get an account, you can add a payment card to your account and pay 25% of an item before taking it home. You can then settle the remaining amount in installments.