A social media influencer shared how she got over $ 2,000 in debt to Afterpay after forgetting how much she spent with the short-term lender.
TikToker Lillian Bradford shared a screenshot of her total debt with the purchase, now pay for service later – which forced her to pay $ 2,093.17 in 60 days to avoid late fees.
“I fully felt like I owed maybe only $ 300 max on Afterpay,” she said.
She said she had more than enough saved to refund the money and doesn’t notice when the refunds are deducted from her bank account.
Referring to his video on his own feed, Perth-based mortgage broker Robert Roper said a growing number of Australians are putting their homeownership prospects at risk by routinely putting their purchases through Afterpay.
TikToker Lillian Bradford shared how she racked up over $ 2,000 in debt with Afterpay when she thought she only owed the short-term lender $ 300.
Ms Bradford explained how she had to pay $ 2,093.17 in 60 days to avoid late fees with the short-term lender
Much like a credit card, the popular loan service allows users to pay for items in installments without interest as long as they make the repayments on time.
But Mr Roper said Australians should be aware of how using the service affects their credit score and their chances of getting a home loan later in life.
“I have recently been inundated with clients who are in exactly this position,” he said in a clip on the video-sharing site.
“People are becoming oblivious to the amount they spend through Afterpay rather than paying up front.
“But what many users don’t realize is the negative impact it can have on your credit score.”
He said credit bureaus considered Afterpay to be “negative credit” because it may show that the person taking the loan is living beyond their means.
Robert Roper, director of Trusted Finance in Perth, said a growing number of Australians are jeopardizing their homeownership prospects by channeling their purchases through Afterpay.
Mr Roper said in a TikTok video that Australians should know how the service affects their credit score
“Otherwise, why don’t you pay something up front?” ” he said.
“If your credit score drops below 620, they [the lender] could deny you a home loan.
Commentators below her video said lenders even told them to close their accounts with Buy Now, pay for services later before approving a home loan application.
“They made my partner shut down their ZipPay and provide proof,” one person wrote.
“I had an active AfterPay purchase and the bank called me and asked if I could pay for it before submitting the documents,” said another.
H&R Block tax agent managing director Brodie Dixon previously told Daily Mail Australia that a bad credit score, due to excessive debt, was a sure-fire way to miss a home loan.
He had a message for “younger people, especially those who use credit cards and buy now, pay for services later.”
“What a lot of young people don’t realize is that defaults can affect their credit score,” he said.
“This may have lasting effects on their ability to be approved for loans in the future.”
Major lenders, including banks, rely on data from consumer credit checking companies Experian and Equifax for individual credit scores to determine if a person’s daily spending habits would make them a risk. potential borrowing.
Spending too much on Afterpay or credit cards can prevent young people from getting approved for a home loan. While interest rates are at record highs, banks are still required to be strict when it comes to approving mortgages. Pictured is Melbourne’s Bourke Street Mall
A spokeswoman for Afterpay said the service is not expected to affect customers’ credit scores.
“Your credit score can be affected when someone does a credit check on you or if you are reported to be paying overdue debts; at Afterpay, we never do credit checks and never report late payments, ”the spokesperson said.
“We don’t think missing a payment with Afterpay should lead to a bad credit history, especially when the average purchase is only around $ 150.
“Unfortunately, we’ve heard stories from our clients that some banks or mortgage brokers tell people that using Afterpay affects their ability to get a home loan, but again that’s not true. ”