Credit worthiness strong amongst BNPL users as regulation comes into effect in Australia

BNPL users welcome introduction of BNPL regulation, however awareness of the specific changes taking effect today remains low, a report from Experian and Afterpay finds.

• Afterpay users’ average credit scores close to credit cards and above personal loans 

• Only 18% aware of incoming BNPL regulations from 10 June 2025

• 62% of BNPL users feel more confident now sector being regulated

DISTRIBUTED-WORK-MODEL/MELBOURNE – June 10, 2025 – The majority of Buy Now Pay Later (BNPL) users are feeling positive about the new BNPL regulations coming into effect today, despite low awareness about the specific changes, new research from Experian and Afterpay has found. 

The report, The Next Chapter of BNPL: An Evolution In The Credit Market, shows BNPL customers are not only supportive of regulation, but they’re already displaying strong credit behaviours with the average credit scores of Afterpay customers similar to credit card applicants and above those applying for personal loans, challenging outdated assumptions about risk and financial literacy in the BNPL space.

The research follows the Australian Government’s Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Act 2024, which brings BNPL products under the National Consumer Credit Protection Act – to ensure transparency and consistency in consumer safeguards.

Drawing on Experian credit bureau analysis of thousands of Afterpay customers, alongside a national survey of 1,000 BNPL customers, the report offers the first comprehensive look at how credit scores, financial behaviour and sentiment intersect under Australia’s evolving credit laws.

Experian’s credit bureau analysis shows that Afterpay customers have an average Experian credit score of 743 — similar to the average credit card applicant (771) and higher than personal loan applicants (646). 

With millions of customers having adopted BNPL services as an alternative way to pay and manage their spending, nearly four in five users (79%) said building good credit history is important to them and more than half (62%) said they feel more confident using BNPL now that the sector is being regulated.

Despite the positive sentiment, consumer awareness of the specific changes remains low. More than half of customers were initially unaware of any changes and just 18% of BNPL users correctly identified that credit checks were part of the new rules.

Brian Bond, Managing Director, Credit Bureaux Experian A/NZ said. “Awareness of the new rules remains low, but support for a proportionate regulatory framework is high. That tells us we have an opportunity — and an obligation — to improve credit literacy and help Australians understand how credit reporting works, what behaviours affect their score, and how to make choices that protect and grow their financial wellbeing.”

“These reforms are an inflection point — not just for BNPL, but for Australia’s entire credit ecosystem. By creating fit-for-purpose rules for the BNPL sector, we’re creating a more consistent, more transparent system that benefits customers and providers alike.”

“At Experian, we hold the largest repository of BNPL credit data in Australia, giving us a uniquely detailed view of how these products are used. With BNPL data now being shared across all credit reporting bodies, every lender and broker will have a more complete picture to support responsible lending decisions.”

Michael Saadat, International Head of Public Policy at Block, said: “At Afterpay, we’ve always supported proportionate, fit-for-purpose regulation that puts customers first. We welcome consistency and transparency across the sector — because when customers are empowered with the right information and protections, everyone wins. Our product was designed with strong guardrails: we have always provided a safer way to pay, our limits have always started low, we’ve partnered voluntarily with the Australian Financial Complaints Authority (AFCA) for many years and offered proactive and generous hardship support — because it’s the right thing to do.”

“As part of the new BNPL regulations, Afterpay have begun conducting credit checks for new customers, and when existing customers are eligible for a spend limit increase. These checks will now appear on a customer’s credit report — but it’s important to know that in isolation, they won’t affect your Experian credit score.”

“The report we’ve commissioned in partnership with Experian shows that BNPL customers are just as creditworthy — and in many cases, lower risk — than those using other forms of credit. These changes give us the opportunity to continue helping Australians develop and maintain strong financial habits through the responsible use of BNPL.”

BNPL users: financially active and credit conscious

The report found today’s BNPL customers are increasingly credit-conscious and financially engaged — with an average age of 36, many are homeowners, have clear financial goals and spend management habits and BNPL is their first, and sometimes only, credit building product. 

Younger BNPL customers, particularly Gen Z, are leading this shift in credit engagement. In fact, Gen Z Afterpay customers have higher average credit scores (685) than their peers applying for credit cards (677).

Experian’s credit bureau analysis shows that 22% of Afterpay customers already have a mortgage, while another 12% are new to credit, having never previously applied for a credit product.

Despite this, misconceptions persist — both in the market and among consumers. One in five BNPL users have been advised by a lender or broker to close their account when applying for a home loan, even though there is no rule requiring this. Over half of those were offered another credit product instead.

The research also showed that Afterpay customers are less likely to miss repayments than personal loan borrowers. By the third month of account activity, only 2.9% of Afterpay customers had missed a payment, compared to 3.7% of personal loan holders and a striking 13.5% in the subprime category.

With less than one in three BNPL users (32%) understanding what a credit score is and what affects it — and even fewer having checked their credit score in the past 12 months (28%) — the need for clear, accessible information has never been greater. For those wanting to better understand how BNPL and credit reporting work, visit CreditSmart.org.au for trusted, easy-to-follow guidance.

The full report is available here.