Usually, BNPL account processing is usually done electronically and no documents need to be submitted.
The BNPL sector in Australia currently operates under a voluntary code of conduct, which requires operators to undertake an assessment to ensure that you can repay a BNPL loan. But exactly how these assessments are undertaken is open to interpretation.
Most BNPL providers undertake a ‘soft credit check‘ when confirming your details and approving your registration, but this check is not recorded on your credit score. Others will approve you for a BNPL account without doing a credit history check.
For example, Afterpay will instantly approve you without performing a credit check if you are at least 18 years old, have a personal email address and mobile phone number, and have an active Australian credit or debit card. Splitit also doesn’t do a credit check, just insisting that you have an available balance on your credit card.
BNPL players that require a credit check before approving your account include Zip Money, Zip Pay, Openpay, Klarna, bundll, Laybuy and Latitude Pay. Humm will insist on a credit check in some cases, depending on the loan amount.
Although a soft credit check will not appear on your credit report and therefore will not impact your credit score, please be aware that if you miss a BNPL payment, it could end up on your credit report, which will impact your credit score.
In addition, the federal government has expressed an interest in closing the loophole that allows BNPL to escape regulation applied to other credit products under Australian law. This may involve more detailed credit checks, so watch this space.
Advantages of BNPL without credit check?
For starters, you can get approved very quickly. You can stand in your favorite store with this new dress in your hand and take it home without paying a dime 10 minutes later.
Not only is approval much faster, but the lender doesn’t know your financial history. Therefore, consumers who do not always meet their financial commitments may also have access to this form of credit, even if they cannot necessarily obtain a credit card.
It also means that consumers with a bad credit history are not punished for mistakes that may well be behind them.
Disadvantages of BNPL without credit check?
Count the paths.
Bear in mind that for now at least the BNPL is not covered by the same obligations that banks and other lenders are subject to, which means that BNPL lenders do not have to check if you can allow you the payments.
Without needing to do a credit check to make sure you’ve handled your finances well so far, it’s easy to go over your head. This means you can get into financial trouble if you over-buy and can’t make payments on time.
If you have poor impulse control, it could mean you’re spending more than you can actually afford. If you don’t trust yourself with money or have a poor track record of managing your finances, be extra careful.
Some people now rely on BNPL to pay for day-to-day expenses such as groceries, which means reimbursements can arrive in droves and quickly, making it more difficult to track payment. It also means making sure you have enough funds on your credit or debit card to cover each payment.
And of course, if you miss a scheduled repayment, you may be subject to high fees and charges, which can affect your credit score.