Understanding Buy Now Pay Later

If the BNPL provider you use is a licensed credit provider and participates in Comprehensive Credit Reporting (CCR), your repayment history may be reported to credit bureaus. On time payments may positively impact your credit score, while missed repayments may negatively affect it.

If your BNPL provider does not participate in CCR, your repayment history will not be reported to credit bureaus so there is no impact to your credit score for paying BNPL instalments on time. However, even if your BNPL provider doesn’t report your repayment history to a credit bureau and you’re thinking about applying for other credit products, credit providers may consider your BNPL usage when assessing your creditworthiness for future loans or credit products, so it’s still important to make repayments on time, when they are due.

From 10 June 2025, new regulations for the BNPL industry require providers to adhere to modified responsible lending practices. This involves assessing your financial situation to ensure the increased limit is affordable for you. When you request a limit increase, the BNPL provider may perform a credit check. If they do, this enquiry will be noted on your credit report and could affect your credit score. Credit limits are just one of the factors that could influence a credit score. These contributing factors do not necessarily affect all people in the same way.

When you apply for a BNPL product, a credit check will be performed as part of their approval process. Credit checks are recorded as an enquiry on your credit report and may impact your credit score.

A credit score is calculated using an algorithm that collects past events to predict future behaviour. Each credit bureau uses its own slightly different way of calculating your credit score, designed to return the most accurate representation of credit history and credit behaviours based on the information it holds. Credit bureaus do not share how this is calculated.

A credit score is dynamic and can change with certain types of behaviour. Some key factors that can influence a credit score are:

• The type of credit providers that you have applied to
• How well you’ve kept up with your repayments
• The credit limit of each of your credit products
• The type of product you have applied for
• The number of credit applications you make
• Any negative events, such as defaults, judgements or bankruptcies

These factors don’t necessarily affect people in the same way. Additional account information factors can include repayment status history, payment terms, credit limits, account types and open and close dates.

Repayment history relating to these essential services is not supplied to credit reporting bureaus so has no impact on your credit score. Telco (home, mobile or internet) and utility (water, gas or electricity) suppliers may share and receive information about your accounts that are open or have been closed in the last two years, but not the repayment history information.

This means your credit report can show the accounts you have with a telco or utility supplier but will not show whether you’ve paid these bills monthly and this is not factored into your credit score.

While this is the case, credit enquiries or defaults from telco (home, mobile or internet) and utility (water, gas or electricity) suppliers may impact your credit score when shared with credit bureaus.

It depends. When you apply for a credit product, credit providers will perform a credit check and may use your credit score when assessing your application. A higher credit score can improve your chances of getting approved for a credit product while a lower score might make it harder. It is important to note that a credit score alone does not determine whether you get approved for credit or not. Lending decisions are based on each credit providers’ individual assessment criteria. Credit providers will also consider other data when making the decision on whether to lend to you or not. Experian cannot comment on the processes or lending criteria of credit providers regarding credit application assessments.

When it comes to behaviours that can influence your credit score, applying for multiple credit products, particularly in a short space of time, could have a negative impact on your score. More importantly, multiple enquiries made in a short space of time may cause credit providers to perceive that you are a greater lending risk.

Additionally, your history of managing credit, including any missed payments or defaults is also another factor. Making regular payments will have a positive impact on your credit score whereas missing payments may have a negative impact on your credit score. A long credit history in which you have made payments on time also works favourably for your credit score. It reflects your experience in handling credit and can influence a credit provider’s confidence in your repayment ability.

Upcoming regulation for the BNPL industry relating to responsible lending practices means that if you open a new BNPL account and your provider is a licensed credit provider participating in Comprehensive Credit Reporting (CCR), your repayment history will be included in your credit report from the time the account is opened. For existing BNPL accounts, if your provider starts participating in CCR, only the repayment history from that point onward will be reflected in your credit report. Previous repayment behaviour before CCR participation will not be included.

A credit report is made up of a range of personal and financial information. Below are some typical types of information provided to credit bureaus by BNPL providers:

• Personal identifying information – Information such as your name, address, driver’s licence number or date of birth required for identification purposes.
• Credit account information – Details about the account you have opened with them such as the type of credit account, the date you opened the account, the credit limit and account status (e.g. opened or closed). If a BNPL provider does not participate in CCR, your repayment history is not reported to credit bureaus.
• Credit enquiries – Any credit enquiries made when you applied for a BNPL account with them. Credit checks are performed as part of their approval process.
• Defaults (an amount more than 60 days overdue for payment and greater than $150AUD) – any defaults on payments, including the amount and date of default.

There’s currently no rule that says you must close BNPL accounts - just as there’s no requirement to cancel credit cards or personal loans - before applying for a home loan. What matters most is how you manage your credit overall. Credit providers and mortgage brokers are required to adhere to responsible lending practices. This involves assessing your financial situation to ensure the home loan you’re applying for is affordable for you. Lending decisions are based on each credit providers’ individual assessment criteria, and they will consider a range of factors when deciding on whether to approve your home loan application or not. These factors can include your income, expenses, credit exposure and how reliably you meet your existing obligations.

Even after closing a BNPL account, it remains visible on your credit file for two years from the closure date.

Using BNPL services and / or credit cards can impact your credit score. With new regulations for the BNPL industry coming into effect from 10 June 2025, providers will need to comply with responsible lending requirements. This means BNPL providers will evaluate your financial situation by conducting a credit check to ensure the BNPL product you are applying for is affordable for you, as is currently the case with other credit products and credit cards. This enquiry will be recorded on your credit report and may impact your credit score.

A credit score is not fixed and can change with certain types of behaviour, and how you manage your credit. Some key factors that can influence a credit score are:

• The type of credit provider that you have applied to
• How well you’ve kept up with your repayments
• The credit limit of each of your credit products
• The type of product you have applied for
• The number of credit applications you make
• Any negative events, such as defaults, judgements or bankruptcies

Every credit report is a little different. Not all factors are weighted the same, and what impacts one person’s score may not affect someone else’s in the same way. Other details—like your repayment history, payment terms, account types, and when accounts are opened or closed—can also come into play.

Understanding how credit works can help you make confident decisions and stay in control of your financial wellbeing.

A credit score may go up or down due to new information, but this is not always the case. For example, if you already have a very low credit score, a new default may not lower your score further; similarly, if you have a very high credit score, continuing to make payments on time may not always increase your score. Making enquiries into BNPL products may leave your score unchanged or reduce it somewhat. Having open BNPL accounts may leave your score unchanged, or they may improve or worsen it depending on your repayment history.

There are things you can do when using BNPL services in Australia to protect your credit standing:

• Pay on time: Pay off your BNPL instalments on time. Late or missed payments can negatively impact your credit score.
• Limit the number of BNPL accounts: Avoid having multiple BNPL accounts, as it can make repayments harder to manage and may raise concerns for credit providers about your ability to handle credit.
• Monitor your credit report: Regularly check your credit report to keep track of how your BNPL usage is being reported.
• Stay within your budget: Use BNPL only for purchases you can afford to pay off within the repayment period.

By following these practices, you can use BNPL services responsibly and minimise any potential negative impact on your credit score.