Does Zip Pay Affect Your Credit Score? Complete Guide

Zip is one of Australia's major Buy Now Pay Later (BNPL) services, offering interest-free payment options for purchases at major retailers.

When used responsibly, BNPL services can help you manage your finances and spread costs. However, they carry real risks that could damage your credit score and affect your ability to borrow in the future.

Note: Using Buy Now Pay Later services carries significant risks. You could lose money and damage your credit rating if you cannot keep up with repayments. Only borrow what you can afford to repay. Consider whether the product is suitable for your circumstances and seek independent advice if needed.

Related reading: Can Buy Now Pay Later Affect My Credit Score

Yes, Zip Pay can affect your credit score in two main ways:

Credit Check Impact

When you apply for Zip Pay, the company performs a credit check that appears on your credit report. The nature of this check (whether it impacts your score) may vary depending on Zip's internal processes and your individual circumstances.

Applying for multiple credit products in a short period can impact your credit score. The effect varies between individuals based on your credit history and personal circumstances - there's no way to predict the exact impact on your score.

Payment History Impact

Missing payments or defaulting on Zip Pay can cause serious damage to your credit score. This is the biggest risk with any credit product.

Zip's terms and conditions state that you may be in default if you do not pay your minimum repayment amount by the due date. In default situations, Zip may report this to credit bureaus, which can significantly damage your credit score.

Important: Failure to make minimum payments by the due date may result in default. This can lead to:

• Debt collection action
• Legal costs added to your debt
• Serious damage to your credit score
• Reduced ability to obtain credit in the future

Defaults can drop your score significantly and remain on your credit file for years.

Understanding Credit Reporting for BNPL Services

Important clarification: Like many BNPL providers, Zip may not routinely report on-time payments to credit bureaus. This means:

• Making regular payments may not help build your credit history in the way traditional credit products might
• Only negative information (missed payments and defaults) is typically reported
• You should not rely on Zip Pay as a tool to actively build your credit score

While responsible management of any credit product is beneficial for your overall financial health, the credit-building benefit with BNPL services is minimal or absent in most cases.

Key principle: Only borrow what you can afford to repay.

Zip Pay is a BNPL product offering a spending limit up to $1,500. You can use it online at major Australian retailers and in-store through their digital Visa card.

The service provides flexible repayment options - you can pay weekly, fortnightly, or monthly with no interest charges on your purchases.

The Zip app includes a digital Visa card that works with Apple Pay and Google Pay, allowing you to shop anywhere Visa is accepted. The app also offers rewards and cashback to encourage regular use.

Zip Pay Fees

Zip charges a monthly account fee of $9.95 if you carry a balance. You can avoid this fee by paying your full balance each month.

Late payments incur an additional $7.50 fee.

Cost perspective: The monthly fee of $9.95 represents a significant cost on smaller balances. For example, on a $200 balance, this equates to approximately 4% per month. You should compare the total cost of credit across different products before deciding which option suits your needs.

Zip Pay is a Buy Now Pay Later product like Afterpay and others in that it enables you to make a purchase, at Bunnings for example, and pay back this purchase over time.

BNPL services can help people facing unexpected expenses, such as essential car repairs or appliance replacements. However, before using any credit product, you should carefully assess whether you can afford the repayments. Using credit when you cannot afford a purchase outright increases your risk of financial difficulty.

Payment Flexibility

Unlike Afterpay's fixed four-payment model, Zip offers more flexible repayment terms. You choose your repayment schedule when signing up.

The default setting is minimum monthly payments, which triggers the monthly fee if you have an outstanding balance.

You can avoid fees by paying your full balance each month - similar to using a credit card's interest-free period.

Compare Credit Cards based on your profile with ClearScore.

No, Zip Pay charges fees including a $9.95 monthly account fee (waived if you pay your full balance) and $7.50 late payment fees. While marketed as 'interest-free', these fees represent the cost of borrowing and should be considered when evaluating the product.

According to Zip's annual reports, some of Zip's revenue comes from the $9.95 monthly fee that customers pay if their balance is not paid in full, plus $5 late fees and fees charged to merchants.

Zip Pay works at major Australian retailers including:

• Bunnings
• Target
• Big W
• Kmart
• Amazon Australia
• Officeworks
• Harvey Norman (online only)
• The Good Guys
• Cotton On
• Rebel Sport

Zip Pay is accepted by a wide range of major Australian retailers: A full list can be found here.

Yes, Zip performs credit checks when you apply. These checks appear on your credit report.

Australia operates a Comprehensive Credit Reporting system, which means lenders share detailed information about your borrowing history with credit reference agencies.

Zip's terms and conditions also state that the company considers you to be in default if you do not pay your minimum repayment amount by the due date. Zip reserves the right to use solicitors to recover any unpaid balance and to charge your account with the legal and other enforcement costs.

At ClearScore, we give you free access to your credit score and report, helping you monitor and understand your credit health. Sign up for your free credit score here.

What Happens If You Miss Payments?

Making payments on time is crucial for maintaining a healthy credit score. Zip considers you in default if you miss minimum payments by the due date.

For unpaid balances, Zip may use solicitors to recover the debt. They can charge your account for legal and enforcement costs, which increases the total amount you owe.

Related reading: What is a credit report?

The evidence suggests that using Zip Pay is unlikely to improve your credit score through regular, on-time payments.

Here's why: Unlike traditional credit products (such as credit cards or personal loans), BNPL providers like Zip typically do not report on-time payments to credit bureaus. This means:

• Your positive payment behaviour may not be recorded on your credit file
• Future lenders won't see this payment history when assessing your applications
• You miss out on the credit-building benefit that comes with traditional credit products

What does get reported: Zip may report negative information, such as missed payments and defaults, to credit bureaus like Equifax and Illion. This means Zip Pay can hurt your credit score but is unlikely to help it.

If building your credit history is a priority, you may want to consider traditional credit products like credit cards, where both positive and negative payment history is typically reported.

In practical terms the products are not much different. For example both credit cards and Zip Pay both allow you to:

• Buy something today but pay it back later
• Have interest free periods if you pay your balance on time
• Can be used at a variety of stores
• Will negatively impact your credit score if you don’t pay on time

The cost of credit is not as different as is made out. Zip Pay claims to be ‘interest free’ but so is a credit card if you pay in full. It’s really worth considering the total cost of credit including regular monthly fees and interest charges.

The interest rate on a credit card might be between 1 and 1.5% per month. So if you have a balance of $200 you pay between $2 and $3 in interest charges per month. If you use Zip Pay and have an outstanding balance of $200 you would pay $9.95 in fees. In this case Zip is rather more expensive than a credit card! It all depends on how much you borrow and how long you borrow for. If you borrowed $1000 you would pay $10-15 in interest on a card but still only $9.95 on Zip. Both credit cards and Buy Now Pay Later are very flexible and reasonably priced forms of credit if you use them and pay down your balances in a few weeks or months.

Traditionally credit cards have been much more flexible than Zip because Zip was limited to only being used at retailers that had a relationship with Zip. We conducted a study, and found 86% of Zip users had more than one Buy Now Pay Later account to be able to buy now and pay later in other stores.

There are many alternatives to Zip. Zip itself has a Zip Money product for higher credit limits. There are also many other Buy Now Pay Later companies. The major ones in Australia include:

• Afterpay
• Humm
• Openpay
• StepPay

See them in more detail below:

Data correct as of Dec 2025

Your credit score tells the story of your financial reliability, and understanding it is the first step to taking control of your financial future. With ClearScore, you can access your credit score and full credit report completely free, updated weekly, for life. Here's what you get:

1. See your credit score and report, always free

Access your complete credit report from both illion and Experian, giving you a comprehensive view of how lenders see you. Check your score anytime, anywhere, with no hidden fees or charges, ever.

2. Understand what affects your score

Get clear insights into what's helping or hurting your credit score. Track payment history, credit utilisation, account age, and recent searches. See exactly which factors are making the biggest impact on your score.

3. Spot errors and opportunities

Review your credit report weekly to catch mistakes that could be dragging your score down. See all your credit accounts, payment history, and any searches in one place, updated regularly so you're always in the know.

4. Get personalised tips to improve

Receive tailored guidance on how to build your score over time. Whether you're starting from scratch or working to improve an existing score, you'll get actionable steps matched to your situation.

Why choose ClearScore for credit monitoring?

• Free forever - Track your score and report with no fees, no trials, no catches
• Weekly updates - See changes to your credit report every week, not just once a year
• Two credit reports - Access both illion and Experian data for complete coverage
• No impact on your score - Checking your own score won't affect your credit rating
• Take control - Understand your financial health and make informed decisions about credit

Your credit score affects everything from mortgage rates to mobile phone contracts. With ClearScore, you can track your progress, spot opportunities to improve, and build the financial confidence to reach your goals. Check your credit score on ClearScore

Frequently Asked Questions

Does Zip Pay affect your credit score in Australia?

Yes, Zip Pay can affect your credit score through credit checks when you apply and through reporting of missed payments or defaults. However, on-time payments are typically not reported to credit bureaus, which means Zip Pay is unlikely to help build your credit score through regular use.

What happens if I miss a Zip Pay payment?

Missing payments can result in late fees ($5), potential default status, and negative reporting to credit bureaus. This may seriously damage your credit score and affect your ability to borrow in the future.

Is Zip Pay better than a credit card?

Neither is inherently better - the right choice depends on your spending habits, ability to repay, and which product offers the lowest total cost for your situation. One key difference: credit cards typically report both positive and negative payment history, while BNPL services like Zip Pay may only report negative information. Compare the fees, charges, and credit-reporting practices carefully before deciding.

Can I use Zip Pay anywhere?

You can use Zip Pay at partner retailers and anywhere Visa is accepted through their digital Visa card feature. This includes most online and physical stores in Australia.

How can I avoid Zip Pay fees?

Pay your full statement balance each month to avoid the $9.95 monthly account fee. Always pay on time to avoid $7.50 late payment fees. Set up automatic full balance payments through the app for the easiest way to stay fee-free.

Disclaimer: This article provides general information only and does not constitute financial advice. Individual circumstances vary, and you may wish to seek independent advice before making financial decisions. Information is accurate at the time of writing and may be subject to change.