By now, you may have heard about Afterpay or seen it advertised at your favorite store’s online checkout. This ‘buy now, pay later’ program lets you pay for your purchases in four interest-free installments instead of all at once.
You may be wondering, though, whether or not Afterpay affects your credit. It might–but first, you should explore the factors that affect your credit score and how you can take charge of your finances. If your credit score is hurting, credit repair benefits from a reputable company like The Phenix Group far outweigh any credit repair costs.
Activities That Affect Your Credit Score
Refinancing Your Loans
If you’re looking for a better interest rate or lower monthly payments, refinancing your loans may be a great financial decision–just keep in mind that refinancing does hurt your credit temporarily.
This happens for two reasons. The first is that you’re closing an account with a payment history and opening a new one that has no repayment track record; the second reason is the fact that by applying for the new loan, hard inquiries from the potential lenders will appear on your credit report. Thankfully, refinancing only hurts your credit score for up to two years.
Length of Credit History
The longer you have a debt in good standing, the better your credit score will be. So, how long does it take to build credit? Typically, your first credit score will appear after six months of having debt, including credit cards, student loans, and auto loans.
Paying on Time
Of course, you have to make the minimum payments on your debts and make them on time; otherwise, your credit score will suffer. Sometimes, you’ll be granted a grace period if you forget to make a payment. That said, if you’re an entire month late, your credit score will suffer.
How Afterpay Impacts Credit Scores
Fortunately, Afterpay doesn’t perform credit checks when they offer a payment program. If you opt to use their services, you won’t need to worry about hard inquiries. This doesn’t just mean your score won’t be negatively affected by taking out an Afterpay loan–it means you won’t need to worry about getting approved if your credit score is lower than you’d like.
There’s a downside to Afterpay that you may not have considered, though: because Afterpay doesn’t go through credit bureaus, you have nothing to show for making on-time payments. Contrary to traditional loans or credit cards, making every payment on time with Afterpay will not positively impact your credit score the way paying other debts on time would. If you were hoping to use Afterpay as a way to improve your credit score, you’ll have to find another solution, such as talking to a credit repair company.
Get Credit Repair Help From The Phenix Group
If you need help with improving your credit score, you can request a free consultation from The Phenix Group today! We also offer free client setup, credit education, credit report, and personal analysis to determine the best repair program for you.
Before leaping at an offer of interest-free installments for your purchases, it’s a good idea to know exactly what Afterpay is and what your options are in the event your credit score is low. The Phenix Group is here to help!