‘Buy now, pay later’ – sweeter sounding words have never been heard, until you miss a payment and it starts impacting your chances of getting a home loan or investment loan for your property. ZipPay and Afterpay are just two of the many examples of this model, whereby consumers can take possession of goods today and pay them off over time without paying interest. While it sounds like the old days of lay-by, there is one important twist. You get to take the product home today, often before you’ve even paid a cent towards it, and better yet, providers are lending you this money interest-free.

While this sounds like a great model, it’s important to be aware of the traps and how these strategies can impact your credit score.

First, let’s explore what Afterpay and zipPay actually are and how they work

Afterpay is typically used for goods and services up to the value of $500, allowing consumers to take possession of the product today and pay it off, typically over 4 x fortnightly instalments. Afterpay receives a fee from the vendor for providing this service to their customers, and will charge late fees and penalties if any of their customers miss payments.

ZipPay is similar to Afterpay, however the limit is typically capped at $1,000, while they do allow you to request that this be increased to $3,000. Monthly interest-free instalments will need to be made and a minimum will be set by ZipPay. You have the flexibility to set your own monthly instalments as long as they’re greater than the minimum.

We do worry about the behaviour that these providers create, in encouraging Australians and individuals worldwide to not only spend money that they don’t necessarily have, but that they no longer need to save up for the items they want in life anymore because they can take them home today and pay for them later. That being said, in this article we’re not exploring the ethical implications of these models, but rather the possible impact on your credit score.

Before we get into how these could impact your credit rating, let’s explain what your rating is

Your individual credit rating is a number that is based on the analysis of your credit report. Various providers of credit such as credit unions, banks and other lenders, will use this number to determine whether they should lend you money, and if so, how much money and at what interest rate. Your credit score number will be between 0 – 1,200, with 1,200 being the best score available. It is typically considered that any number above 833 will be considered Excellent, and therefore a relatively low risk to the lender.

You can reach out our previous article on how to improve your credit score and understanding your credit score to provide some further context.

Let’s see how ZipPay or Afterpay could affect your credit rating

While ZipPay and Afterpay are not traditional lenders or providers of finance, they can still have a significant impact on your credit score.

With Afterpay, if you have any negative activity on your account such as missed payments, defaults or any chargebacks to your account, the company may decide to report this to the credit bureau. In addition to this, you will also be charged a late payment fee of $10, based on our last check of the T’s and C’s.

ZipPay operates in a very similar manner, and has advised that if there are any defaults on your payments, or if you don’t make your repayment on time, then this will also be reported to the credit bureau. If either of these lenders or other new entrants coming into the market make such as reports, this can have a significant impact on your credit score and therefore your ability to obtain finance and purchase a property or refinance your loan.

If you are considering using such a provider, ensure that you have the safety measures in place so that no payments are missed and there are always funds available in your account to meet your minimum repayments.


LoanSuite Pty Ltd is your lending partner for all of your home loan, investment property, business and commercial financing needs. With our wide range of lending solutions, expertise in financial planning and investment strategies, and extensive experience in working with both Australian residents and Australian expats, we are your partners for your lending needs.

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LoanSuite Pty Ltd is an Authorised Credit Representative (Credit Representative Number – 494608) of My Local Broker (Australian Credit License – 481374). Important Disclaimer: Your complete financial situation will need to be assessed before acceptance of any proposal or product.