Your Afterpay purchases will be added to your Equifax credit report

geezerette · ‎03-16-2010

Your Afterpay purchases will be added to your Equifax credit report

RENO, Nev. (KOLO) - What do services like Afterpay, Klarna and Zip have in common? They all allow shoppers to buy now and pay later.

For years, these types of loans have been mostly untracked by traditional credit reporting, but that’s now changing.

Credit bureau Equifax will start adding such purchases to credit reports with the purpose to give lenders a fuller vision of people’s financial commitments.

Consumer Credit Auditors manager, Derek Louw says this can be helpful for those who are starting to build credit.

“This is an easy way for people to establish positive credit so they can start getting their scores up and acquire better and more useful lines of credit,” said Louw.

These loans allow people to stretch purchases across four biweekly payments, without interest or added fees, making them convenient for many.

However, because of how short these loans are, consumers can open and close multiple at the same, creating potential problems.

“What you have to be aware of is affecting your average age of account,” said Louw. “When you open up a lot of brand-new accounts, if all you have is brand new accounts, that’s great. You can go open a handful of those. If you have other accounts that are better established and you’re trying to bolster those a little bit, you have to be careful how many new accounts you throw into the mix.”

There’s also the risk of falling behind on payments and not only be charged a high late fee, but negatively impacting your credit score.

With the cost of living increasing ‘buy now, pay later’ options have become increasingly popular. According to Mercator Advisory Group, last year such purchases were expected to reach $55 billion.

Experian and TransUnion are also building similar capabilities.

Most ‘pay-in-four’ installment loan services haven’t yet said when they will use the new system to start reporting to Equifax.

qvcfreak · ‎03-10-2010

I don’t like charging any big items for Christmas so easy pay comes in handy for me. But I’ll stop purchasing on easy pay if it’s going to interfere with my credit score.

sometimesQVCaddict · ‎03-09-2010

While not the popular opinion, I do also see these as mini "loans" and not a bad thing to add to someone's "overall" credit profile. Some people could take advantage of the system & have lots of these mini payment things & try to scam the system or not pay or be delinquent in paying. This would keep them accountable.

Personally I'd rather just do 1 payment & pay off my balances every month. I don't leave a continuous balance as I don't like paying interest if I don't have to. My credit score hasn't been affected by paying all my bills (including the credit card) every month!

If I can't afford something, I don't buy it! If it's a required, necessary, need it to live purchase, that's another story. Nothing the Q sells is a "necessary" need to have it to survive purchase.

San Antonio Gal · ‎05-18-2017

@Kachina624 - that would discourage me from using EP. If this does happen in the near future, I will just pay for the item in full. Thanks for the heads up.

moto · ‎03-09-2010

@geezerette wrote:
Your Afterpay purchases will be added to your Equifax credit report
RENO, Nev. (KOLO) - What do services like Afterpay, Klarna and Zip have in common? They all allow shoppers to buy now and pay later.

For years, these types of loans have been mostly untracked by traditional credit reporting, but that’s now changing.

@geezerette Thanks for sharing the article. This is a complicated concept that is important in the financial health for many. If someone is using these new companies like Klarna to make purchases with other sellers that they really can't afford due to bad credit, no one wins. If they are using it because they don't have a credit card at all, this will help them to establish credit.
I don't think QVC would willingly opt in to this program as it seems it would add a layer of administrative costs. Klarna does state they run a soft credit inquiry on your credit and this does not show on your credit score when using their version of easy pay. They do report if you use a different type of credit with them.

NickNack · ‎03-10-2010

@chickenbutt wrote:
This doesn't seem like a good thing to do, at all!

I'm really surprised by some of the things I learned, recently, when we did a refi on our mortgage. I guess they automatically do your credit sheet (makes sense) and what I felt was odd was that they told me that my number was 838.

Ok, whatever, but they also told me that it would have been higher if I didn't keep my credit cards paid off. Huh? From their POV, as opposed to that of a retailer, it makes no sense to me that that would create a negative.

I've always had excellent credit because I've always put paying my bills first. I think it should be a positive if you keep your cards all paid off because that illustrates your responsible behavior toward your financial responsibilities.

@chickenbutt 850 is as high as it goes, so your score couldn't be much higher!

The Bluebird Carries The Sky On His Back"
-Henry David Thoreau

Sage04 · ‎07-10-2011

@NickNack wrote:
@chickenbutt wrote:
This doesn't seem like a good thing to do, at all!

I'm really surprised by some of the things I learned, recently, when we did a refi on our mortgage. I guess they automatically do your credit sheet (makes sense) and what I felt was odd was that they told me that my number was 838.

Ok, whatever, but they also told me that it would have been higher if I didn't keep my credit cards paid off. Huh? From their POV, as opposed to that of a retailer, it makes no sense to me that that would create a negative.

I've always had excellent credit because I've always put paying my bills first. I think it should be a positive if you keep your cards all paid off because that illustrates your responsible behavior toward your financial responsibilities.

@chickenbutt 850 is as high as it goes, so your score couldn't be much higher!

@chickenbutt I remember reading a Thread some time last year where Posters were saying they paid off their Credit Cards at the end of the month. Most of course might not have known that it affected their credit scores, or maybe they didn't care about that.

It might not affect it much but could if all you have are Credit Cards and paid them off monthly. A basketball player I know made over 6 million a year and had no Credit because he paid everything in Cash.
He thought that was the best thing to do but changed his mind when he finally bought a house.

Sage04 · ‎07-10-2011

Maybe I'm not understanding this but how would that affect someone's Credit Rating? Wouldn't it help that person who has no Credit, establish Credit?

I would think so.

sometimesQVCaddict · ‎03-09-2010

Again, I pay off my credit statements each month & have an excellent credit rating (way above 800). So I'm not sure how or why it would affect your score if you don't do this, as I have first hand knowledge that it has not affected my credit score one bit! I'm sure each individual is different, but to make a blanket statement saying you shouldn't pay off your cards to increase your credit score simply isn't true for all people.