Missed Buy Now, Pay Later (BNPL) repayments are typically not recorded on credit reports, creating a “blind spot” for lenders when appraising loans.
Credit reports are viewed by many lenders when reviewing loan applicants, and the scores calculated from them play an increasingly important role in securing finance.
However, with the rapid adoption of BNPL’s services, especially among young people, the blind spot of credit transparency is growing, says Kevin James, general manager of advisory services and solutions at the agency. Equifax Credit Assessment.
At the same time, the use and awareness of BNPLs among consumers is growing rapidly.
Almost half of Australians are familiar with Zip, Afterpay’s biggest rival, an increase of over 30 percentage points since 2018.
Michele Levine, managing director of Roy Morgan, said hundreds of billions of dollars in government stimulus packages have supported the economy and led to record retail spending, which has turned out to be a boon for services innovations from BNPL.
“When the COVID-19 pandemic hit Australia, forcing a national lockdown, many predicted it would lead to economic disaster.
“However, unprecedented stimulus payments from the government, including JobKeeper’s $ 100 billion wage subsidy, have supported the economy and led to a year of expansion for many large retailers,” Levine says.