05th May 2021

We’re here to clear up credit confusion

  • Did you know three out of four consumers say they don’t have enough information on how BNPL impacts their credit scores? *
  • 37% of current BNPL users don’t understand how their BNPL plans could be affecting their credit score*

* Source: Pollfish

What is a credit check ?

When we want more information to help us decide if we should provide you with credit or not, we ask credit reporting bodies (also known as credit bureaus) to share a copy of your credit report. This is only done if you provide us consent to do so.

The credit report includes information on how you manage loans or debt and shows your repayment history. This allows us to assess your creditworthiness – i.e. are you able to manage the Openpay plan we’re providing to you?

To find out more on what is included in your credit report, have a read of the OAIC website. It has lots of helpful information about this process.

Do you conduct a credit check on all customers? Will you do this each time I apply for a plan?

When you open an account with Openpay you receive an initial spending limit, which is calculated using our own decisioning process based on a range of factors. Only if you request an increase to this initial spending limit would we conduct an external credit check – and only if you provide us consent to do so.

If you then ask for this higher limit to be further increased, we use our internal credit decisioning process to look at data such as your purchasing history and spending patterns on our platform to come to an informed decision. This is a thorough process, ensuring we limit the number of requests on your credit report.

All external credit checks on you are listed on your credit report. If several of these checks are showing, especially in a short period of time, it could have a negative impact on your credit score and ability to access credit elsewhere.

Will a credit check reduce my ability to make a purchase using BNPL?

A credit check allows us to better understand your financial position and helps us make a responsible decision. Your credit report may show you’re in a strong financial position and are a responsible borrower, which would mean we’d be comfortable providing you with a higher spending limit.

On the other hand, if the report displays potential financial difficulties, it could limit the amount of lending we extend to you. We take our responsible approach seriously and put a lot of effort into ensuring that we set up people with plans they can afford.

What is a credit score and how do I find out what my score is?

A credit score is a numeric indicator of your creditworthiness – your eligibility to be given credit – and is calculated using the information within your credit report. Heads up – each credit bureau uses their own scoring system so the numerical value can change between bureaus.

You can request a free copy of your credit report at any time from the credit bureaus (without affecting your credit score). Visit the OAIC website here for more information on how to access your free credit report.

Is using Openpay ‘bad’ for my credit score?

A BNPL payment does not show up directly on your credit report, as the payments are deducted from your bank account (via a debit card) or your credit card. However, if you default on a BNPL payment, there is a chance the lender could flag this on your credit report – in turn this could have a negative impact on your score. But this is dependent on the provider in question. We’d recommend taking a look at the provider’s terms and conditions and privacy policy if you have any concerns – you can find Openpay’s here.

At Openpay we’re all about providing flexibility and we appreciate your circumstances may change over time. If you’re ever in a position where you cannot make a payment, we’d encourage you to contact us via phone or email before your payment due date to proactively reschedule a payment, to avoid a default situation.

Will Openpay make it harder for me to get a home loan or a credit card?

This is dependent on the individual lender you’re applying to for a home loan or credit card and how they evaluate your creditworthiness. Each lender will have their own requirements however they all have to follow a similar assessment process. This does include examining all your outstanding liabilities (including BNPL plans). We’d recommend having a read of the CreditSmart website to find out more.

If I don’t have a credit card, will BNPL help me get a better credit score?

No, because a BNPL payment does not show up directly on your credit report, as the payments are deducted from your bank account (via a debit card). For more information on how to manage and improve your credit score, we recommend visiting CreditSmart website.

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