Does Afterpay Build Credit? What To Know in 2025

Afterpay has become one of the most popular buy now, pay later services, allowing shoppers to split purchases into four interest-free payments. Many people wonder if using this payment method can help improve their credit scores over time.

Afterpay typically does not build credit because it doesn’t report payment activity to major credit bureaus. Unlike traditional credit cards or loans, Afterpay does not have contact with credit reporting bodies, which means on-time payments won’t boost credit scores for most users.

However, the relationship between Afterpay and credit is more complex than a simple yes or no answer. Some credit reporting agencies have begun accepting buy now, pay later data, and missed payments can still impact financial health through late fees and potential credit damage. Understanding how Afterpay works compared to other credit-building options helps consumers make informed decisions about their payment methods and credit-building strategies.

Key Takeaways

• Afterpay generally does not build credit since it doesn’t report to most credit bureaus
• The service works differently from traditional credit products and other buy now, pay later options
• Missing Afterpay payments can result in late fees but typically won’t directly harm credit scores

Does Afterpay Build Credit and How Does It Impact Your Credit Score?

Afterpay does not build credit because it doesn’t report payment activity to credit bureaus. The service uses soft credit checks that won’t hurt your score, but missed payments can lead to fees and account restrictions.

Afterpay’s Policy on Credit Reporting

Afterpay does not affect your credit score according to the company’s official policy. They don’t report payment history to major credit bureaus like Experian, Equifax, or TransUnion.

This means making on-time Afterpay payments won’t help build credit history. Even customers who consistently pay all four installments on schedule won’t see improvements to their credit score.

The company states they don’t believe missing installment payments should result in bad credit history. This approach differs from traditional credit cards and loans.

Key differences from traditional credit:

• No positive payment reporting
• No negative payment reporting to bureaus
• No impact on credit utilization ratios
• No contribution to payment history

Credit Checks and Approvals with Afterpay

Afterpay performs soft credit checks during the approval process. These soft credit checks don’t impact your credit score or appear on credit reports that lenders can see.

The soft credit check helps verify identity and assess basic eligibility. This differs from hard credit checks used by credit card companies and loan providers.

Customers can apply for Afterpay without worrying about temporary credit score drops. Multiple Afterpay applications won’t accumulate hard inquiries on credit reports.

The approval process focuses more on current financial capacity than credit history. This makes Afterpay accessible to people with limited or poor credit backgrounds.

Why Afterpay Payments Don’t Affect Credit Bureaus

Afterpay does not have contact with credit report bureaus or reporting bodies. The company operates independently from traditional credit reporting systems.

Traditional lenders report both positive and negative payment behavior to credit bureaus. This reporting helps build credit scores over time through consistent payments.

Afterpay’s business model focuses on merchant fees rather than interest charges. They don’t need credit bureau relationships to assess ongoing risk like traditional lenders do.

The lack of credit bureau reporting means Afterpay payments exist in a separate financial ecosystem. Users miss opportunities to demonstrate responsible payment behavior to future lenders.

Potential Pitfalls and Limitations of Afterpay for Credit Building

Late fees can accumulate when Afterpay payments fail. The service charges $8 initially, then another $8 after 10 days, capped at 25% of the original purchase amount.

Missed payments can lead to account suspension until all balances are cleared. This prevents future purchases through the platform and may cause inconvenience.

Afterpay limitations for credit building:

• No credit history development
• No payment reporting benefits
• Potential fee accumulation
• Account restrictions for late payments

In extreme cases with multiple missed payments, debt collection agencies may get involved. While this doesn’t directly impact credit scores through Afterpay, collection accounts from other sources could still appear on credit reports.

Using Afterpay responsibly won’t help improve credit scores, making it unsuitable as a credit-building tool. People focused on improving credit should consider secured credit cards or credit-builder loans instead.

How Afterpay Works Compared to Other BNPL and Credit Solutions

Afterpay offers a different approach to financing purchases than traditional credit cards, with no interest charges and simpler approval processes. The BNPL service competes with other payment options like Klarna while providing specific advantages for online shopping at major retailers.

Afterpay vs. Credit Cards for Credit Building

Credit cards help build credit history through monthly reporting to credit bureaus. When consumers make on-time payments, their credit scores can improve over time.

Afterpay does not report payments to credit bureaus, so it won’t help build credit. This makes it different from traditional credit cards that track payment history.

Credit cards charge interest on unpaid balances, often between 18-29% annually. Afterpay charges no interest if payments are made on time.

Key Differences:

• Credit cards: Build credit history, charge interest, require credit checks
• Afterpay: No credit building, no interest, minimal credit requirements

Credit cards offer ongoing credit lines that consumers can use repeatedly. Afterpay creates separate payment plans for each purchase without establishing a revolving credit line.

Alternatives: Other BNPL Services Like Klarna

Klarna provides more flexible payment options than Afterpay but may charge interest on longer payment plans. Affirm offers loans for larger purchases but conducts hard credit checks.

BNPL Service Comparison:

Sezzle works similarly to Afterpay with four installments. PayPal offers pay-in-4 options through its existing payment platform.

Some BNPL services like Perpay do report to credit bureaus through paid upgrade programs. These services cost extra monthly fees but can help build credit history.

Interest-Free and Installment Payment Options

Afterpay splits purchases into four equal installment payments over six weeks. The first payment happens at checkout, with three remaining payments every two weeks.

This BNPL service charges no interest when payments are made on time. Late fees can reach up to $8 per missed payment, but total fees cannot exceed 25% of the original purchase.

Traditional installment loans charge interest throughout the repayment period. Personal loans typically have APRs between 6-36% depending on credit scores.

Alternative financing options include:

• Store credit cards with promotional 0% periods
• Personal loans for larger purchases
• Layaway programs that hold items until paid off

The payment option works with debit cards, credit cards, and bank accounts. Afterpay does not accept savings accounts or international payment methods.

Where and How to Use Afterpay in Online Purchases

The Afterpay app connects to thousands of online retailers including fashion brands, electronics stores, and beauty companies. Popular merchants include Shein for clothing and various eyewear retailers.

Online purchases work through the retailer’s checkout process. Shoppers select Afterpay as their payment option and complete approval within seconds.

The BNPL service also offers a digital card for in-store purchases. Consumers can shop at participating brick-and-mortar locations using the Afterpay app.

Using Afterpay Online:

1. Add items to cart at participating retailers
2. Select Afterpay at checkout
3. Complete quick approval process
4. Make first payment immediately
5. Pay remaining three installments automatically

Apple Pay integration allows faster checkout on mobile devices. The payment option appears alongside other methods like credit cards and digital wallets during online purchases.