Does Apple Pay Later Affect Credit Score?

Does Apple Pay Later Affect Credit Score?

In the recent past, Apple introduced a new service called Apple Pay Later, which will enable users to pay for an Apple Pay purchase in 4 installments over 6 weeks. It will be available wherever Apple Pay operates, and the user will not have to pay any extra fee or interest for it. However, there are still some consumers who are asking whether Apple Pay Later will affect their credit rating. Below is an insight on how Apple Pay Later works as well as whether and how it might impact your credit.

How Does Apple Pay Later Actually Work?

The Apple Pay Later feature allows for a selection of purchases between $50 and $1,000 to be paid in four installments over two weeks for six weeks. When checkout, the Apple Pay Later offer will be listed under the payment cards section when using Apple Pay. If they opt for Apple Pay Later and the transaction is approved, then the total amount of the purchase will be divided into four payments to be charged to the user with the Apple Pay Later balance.

Notably, Apple does not ask for credit checks and also does not inform credit bureaus about the use of this service. However, the service is only available to users who first sign up for Apple Pay and who have linked a credit or debit card to the service. Some transactions may not be processed because the user's account may be on a negative balance. However, if approved, Apple Pay Later is like borrowing the total amount directly from Apple on behalf of the user without incurring any interest charges or extra fees.

The service is somewhat less oriented on the protection against emergencies and more on the possibility of saving money and time. However, it does allow consumers more choice in how and when they can make payments for Apple Pay purchases without incurring debt or fees like they would with a credit cash advance or any short-term loans.

Whether or not Apple Pay Later Hurts Credit Score

But there is a short answer which is no using Apple Pay Later should not influence your credit score. This is because Apple has stated that it does not inform credit bureaus about the use of Apple Pay Later or conduct hard credit checks that can impact your score.

However, while we have already mentioned that Apple Pay Later itself does not influence your credit rating negatively, if you fail to make payments and your account goes into delinquency, then, of course, it will lag your credit score. Here are some key points about credit reporting and Apple Pay Later.

• Apple does not send the usage rate of Apple Pay Later to the credit bureaus such as Equifax, Experian, and TransUnion. This means that making use of the service will not reflect on your credit reports or FICO or VantageScore credit scores.
• Apple mentions that they may conduct soft credit checks at some point after you have been approved for the service. It is important to note that soft inquiries do not hurt the credit scores.
• Missing Apple Pay Later balance payments can lead to account termination, collection efforts, and difficulties for six weeks without affecting credit scores at first.
• Still, Apple may continue to report the Apple Pay Later payments that are significantly delayed or missed to credit bureaus in the future. As stated above, if reported, late payments would decrease credit scores.
• If Apple Pay Later payments remain unpaid for 90 days, Apple may sell the accounts to collection agencies that do report to credit bureaus. Collections activity negatively impacts credit scores more than anything else.

Therefore, to be clear, using Apple Pay Later today won't adversely affect your credit, but failing to pay on time and get your account shut down or receive collections referrals will negatively affect your credit scores in the long run.

How to use Apple Pay Later without affecting credit score?

If you plan to use Apple Pay Later, take steps to ensure on-time payments and avoid credit score impacts.

• Inform clients to make payments every two weeks after they have used the services offered to avoid cases of default payments.
• Ensure one sets aside $12. 50 for weekly payments when using Apple Pay Later to avoid ending up in a lot of debt.
• Go to the Wallet app to track the balance of Apple Pay Later and be ready to make the payments when due.
• If you expect to have problems in making some upcoming Apple Pay Later payments, you should consult Apple support.
• To ensure you do not incur any penalty in terms of interests and fees, make at least the minimum due every two weeks before the due date until the entire balance is paid.
• Find out how you can review your credit reports frequently to ensure no new negative entries are created in connection to the missed Apple Pay Later payments.

Apple Pay Later is designed to be a low-interest, short-term financing solution that splits costs into equal and convenient payments. So long as all these payments are made within the required time every two weeks, you should not see your credit scores dip. However, before using this service, ensure that you can handle the repeated charges within six weeks in order not to affect your score in the future. This is because you can also check your credit reports from time to time to have peace of mind.

If used correctly Apple Pay Later provides a tool to split the cost of a large Apple Pay purchase without paying any fees, any interest, or jeopardizing your current credit rating. However, it can still hurt your credit in case non-payment issues arise in the future in case of defaulting on the agreed payment terms.

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