Australians urged to prepare as BNPL credit reporting changes

Uncertainty remains about how new Buy Now, Pay Later (BNPL) regulations in Australia will affect consumers' credit scores and borrowing capacity, with millions potentially impacted ahead of regulatory changes commencing in June 2025.

From 10 June 2025, BNPL platforms will operate under the National Consumer Credit Protection Act, introducing affordability assessments and increased consumer safeguards in line with other regulated credit products.

The imminent changes aim to provide stronger consumer protections and ensure responsible lending practices across the industry. However, much remains unclear about how these regulations will alter credit reporting procedures for BNPL users, particularly for past and future BNPL transactions.

This lack of clarity is seen as problematic for both consumers and lenders, as there is ambiguity over how previous BNPL activities will be treated on credit files, and how future activity will influence credit scoring and lending decisions.

Clayton Howes, Managing Director and Chief Executive Officer at MONEYME, highlighted the importance of clarity around the implications of BNPL usage on credit scores and borrowing power, particularly among younger Australians, a demographic with high BNPL uptake.

"The upcoming BNPL regulations are a step in the right direction for stronger consumer protections. It will also give lenders a more complete view of a borrower's credit commitments, which will help all lenders make more informed, responsible lending decisions."

"Bringing BNPL within the regulatory framework will help ensure affordability checks and better transparency, both of which are positives for Australian consumers," Clayton Howes said.

Howes added, "However, with just two months until these changes take effect, there's still too much uncertainty around how BNPL usage – past and future – will impact credit scores.

"This lack of clarity makes it difficult for Australians to plan ahead, and for the millions of people, particularly Gen Z and Millennials who use BNPL, it's important to understand how their borrowing power could be affected."

"The impact will depend on how credit reporting agencies and BNPL providers interpret these regulatory changes, but clearer guidance is needed sooner rather than later," he added.

Currently, some BNPL providers do report to credit bureaus, but the forthcoming regulations are expected to lead to broader and more consistent credit reporting.

The extent to which historical activity will be considered remains uncertain, and industry observers are awaiting direction from credit reporting agencies and BNPL firms.

The lack of explicit guidance means BNPL users may be unaware of the potential for lower credit scores or loan rejections, especially if historical BNPL use is retrospectively counted or if future use is factored heavily into creditworthiness assessments.

With approximately 60% of Gen Z and Millennials using BNPL services, industry experts are urging these consumers, in particular, to take proactive steps to safeguard their financial positions ahead of any changes.

Howes offered practical advice for consumers seeking to protect their credit standing in the current uncertain environment around BNPL reporting.

"While industry discussions are ongoing, BNPL users can take proactive steps now to protect their credit profiles, such as staying on top of repayments and treating BNPL like any other credit product."

"Good financial habits will always be the best safeguard, and understanding the factors impacting your credit score is a good place to start," Howes said.

Actions recommended for BNPL users include treating BNPL accounts like other forms of credit, only spending amounts that can comfortably be repaid, making payments promptly, limiting the number of active BNPL accounts, avoiding multiple applications in a short timeframe, and monitoring credit scores regularly.

Multiple open accounts—even if unused—can be viewed negatively by lenders, and applying for several at once could indicate financial distress.

Regularly monitoring credit scores and understanding how they are influenced can help users make informed borrowing decisions, with tools available via digital lenders such as MONEYME for tracking and managing credit health.

The ongoing uncertainty around credit reporting and BNPL regulation means a significant proportion of consumers, particularly younger Australians, are being urged to inform themselves of potential risks and take prudent steps to protect their creditworthiness as the BNPL industry moves to comply with the new regulatory framework next year.