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More and more merchants are offering “Buy Now Pay Later” (BNPL) services, allowing customers to split up their payments on larger purchases. Afterpay offers a financing option that allows consumers to make installment payments over time until the full purchase price is paid off, with no interest. 

Sounds a bit like a mini loan, right? So, will your credit score be impacted if you chose Afterpay to pay for your purchase over installments rather than pay in full upfront?

Let’s take a closer look at this innovative service to help you decide if it’s worth taking advantage of. 

What Is Afterpay? 

Afterpay is a financial technology company that operates in Canada, the US, the UK, Australia, and New Zealand. The platform offers buy now pay later payment plans that allow consumers to make purchases online and in person with participating merchants and pay in installments rather than in one lump sum upfront. 

After initially launching in Australia in 2018, Afterpay now serves more than 10 million consumers across the globe at over 23,000 merchants. 

What BNPL Plans Does Afterpay Offer?

Afterpay offers an installment payment plan that splits up the full purchase price into 4 equal payments that are made over the course of 6 weeks. The first payment is made at the time of purchase, which is typically 25% of the total purchase price. The remaining payments are made every 2 weeks until the full amount is repaid. 

There’s no interest charged for this financing option, so you can take advantage of this service for free if you make timely payments. Otherwise, you’ll be charged late fees for missed payments. 

How Does Afterpay Work? 

Merchants who are partnered with Afterpay offer shoppers the option to choose the BNPL platform at checkout. First-time Afterpay users will need to provide payment information to complete their purchase. 

Once the transaction is approved, your account is created. You’ll need to create a password on, then simply log in using these credentials for subsequent transactions. 

You’ll receive notifications reminding you when payments are due in advance, with payments automatically withdrawn from your credit card or bank account. For more expensive purchases, the first payment may be higher than the other three, but Afterpay will explain how your installment payments will be divided before you pay.

Does Afterpay Affect Your Credit Scores? 

Conventional financing options typically require a credit check. Some creditors and lenders pull credit reports before approving a borrower for a financing plan to assess their risk level, which may result in a temporary dip in credit scores. 

While Afterpay has the right to check your credit, they typically do not. This means your credit score will likely not be affected and no minimum credit score requirement exists. 

Instead, Afterpay uses an automated system when approving consumers based on purchases and will check your debit or credit account to verify that there are sufficient funds available. A longer history of purchases that have been repaid on time usually means higher approved amounts. 

Will My Credit Be Affected If I Miss A Payment?

That said, your credit scores could be negatively impacted if you fail to keep up with your payments. Afterpay may report missed payments to the credit bureaus, which will be noted on your credit report and may affect the calculation of your credit scores.

Will Using Afterpay Help Improve My Credit?

Afterpay does not regularly report your payments to the credit bureaus, which means using Aftepay will not help you build credit.

Benefits Of Using Afterpay

Afterpay comes with several perks, including the following:

  • No Interest. Unlike other traditional financing options, there’s no interest to pay on the borrowed amount. Instead, you can spread out your payments at no extra cost, as long as your payments are made on time. 
  • Borrow Only What You Need. If you need a little extra help funding a more expensive purchase, you don’t have to waste time applying for a loan to cover the cost. Simply choose Afterpay at checkout to pay only for a quarter of the purchase, and give yourself a few weeks to come up with the rest. 
  • Quick Application. It only takes a couple of minutes to complete the signup process. Then you can use Afterpay right away.
  • Automatic Payments. Payments are automatically deducted from your account, so you won’t have to make manual payments. Afterpay will send you notifications shortly before a payment is due.
  • No Credit Check Is Required. Since Afterpay typically doesn’t pull your credit report, your credit score is not important. Just be sure not to miss any payments and keep your account sufficiently funded before payments are withdrawn. 

How Much Does It Cost To Use Afterpay?

Aside from the total purchase price that you will inevitably have to pay in full over the 6-week payment period, there are late fees charged if you do not make payments on time. 

Payments are automatically withdrawn from your debit or credit card account, so the only way to miss payments is if you have insufficient funds available. You’ll receive notifications to inform you of upcoming payments so you won’t be caught off guard. If your account is a little low in funds, you’ll have some time to top it up so there’s enough in there to accommodate the Afterpay payments. 

If a payment does not go through, you’ll be notified and be given the option to choose a different payment method. If you don’t pay within the grace period, you’ll be charged a $10 late fee initially, which will increase with subsequent failed payments up to a limit of 25% of the purchase price. 

Which Stores Can You Use Afterpay In? 

There are dozens of merchants that use Afterpay. Here are a few of the more popular ones:

  • Aldo
  • American Eagle Outfitters
  • Ardene
  • Aritzia
  • Bed, Bath and Beyond
  • Bench
  • Birkenstock
  • Clarins
  • Fairweather
  • FragranceX
  • GLOBO Shoes
  • Herschel Supply Company
  • Lululemon
  • Lush
  • Puma
  • Roots
  • Shiseido
  • Steve Madden
  • Sunglass Hut
  • Ugg
  • Urban Outfitters

What Happens If You Want To Return Something You Purchased?

If you change your mind about a purchase made using Afterpay, you can get a full or partial refund. 

  • Full Refund. If you return a product and receive the full refund amount, any paid amounts will be credited back to your account and all future payments will be cancelled.
  • Partial Refund. Partial refunds are a little more complicated and depend on when the refund is processed. For example, if you had already made the first payment by the time the merchant processes the refund, the next 3 payments will be cancelled. The first full payment will be adjusted accordingly based on how much has been processed. Any differences are refunded back to the card the payment was paid from. 

Refunds can take up to 7 business days to process, depending on your bank.

Afterpay FAQs

Is Afterpay available in Canada?

Yes, Afterpay is available in Canada at more than 85,000 retailers across the country.

How come Afterpay didn’t approve my purchase?

Afterpay does not approve 100% of orders. Users can visit their dashboard to see an estimate of how much they are allowed to spend.

Does Afterpay affect credit scores?

Afterpay typically does not perform a hard credit check to approve purchases, so your credit score won’t be affected by using Afterpay. If you miss a payment or several, Afterpay could report these missed payments to the credit bureaus, this could have an effect on your credit.

Final Thoughts

Afterpay is a great option if the purchase you’re making is a bit pricey. In this case, you might not want to drain your account all at once. Instead, you can use a free service like Afterpay to split up your payments to make purchases a little easier on your wallet. 

Lisa Rennie avatar on Loans Canada
Lisa Rennie

Lisa has been working as a personal finance writer for more than a decade, creating unique content that helps to educate Canadian consumers in the realms of real estate, mortgages, investing and financial health. For years, she held her real estate license in Toronto, Ontario before giving it up to pursue writing within this realm and related niches. Lisa is very serious about smart money management and helping others do the same.

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