New borrowing rules are coming—here’s how to safeguard your credit power

In the ever-evolving financial landscape, Australians have embraced the convenience of Buy Now, Pay Later (BNPL) services with open arms. These services have revolutionised how we shop, offering a modern twist on the traditional lay-by with the added benefit of instant gratification. 

However, with new regulations on the horizon, Australians must understand how these changes could impact their borrowing power and what steps they can take to protect their credit score.

As the clock ticks down to implementing Australia’s new BNPL regulations, a cloud of uncertainty hangs over millions of Australians who are yet to grasp the full impact these changes will have on their credit scores and borrowing power. 

With the reforms set to take effect on 10 June 2025, consumers must get a clear picture of the financial landscape that awaits them.

The upcoming regulations will bring BNPL products under the National Consumer Credit Protection Act, introducing mandatory affordability checks and bolstering consumer safeguards. 

This move is designed to foster responsible lending and provide a safety net for consumers, but the finer details of how BNPL will be integrated into credit reporting remain murky.

This lack of clarity is particularly concerning for younger Australians, with 60 per cent of Gen Z (born between 1996 and 2010) and Millennials (born between 1981 and 1996) currently using BNPL services. 

The changes could affect these demographics most, potentially facing hurdles when applying for loans or credit.

Clayton Howes, managing director and CEO of MONEYME, has voiced concerns about the ambiguity of the new regulations. 

‘This lack of clarity makes it difficult for Australians to plan, and for the millions of people, particularly Gen Z and Millennials, who use BNPL, it’s important to understand how their borrowing power could be affected,’ he said.

‘The impact will depend on how credit reporting agencies and BNPL providers interpret these regulatory changes, but clearer guidance is needed sooner rather than later.’

The key questions that need answering are whether past BNPL activities will retroactively affect credit scores and how credit bureaus will record and assess future transactions. This information is crucial for consumers to make informed financial decisions and plan for future borrowing needs.

Howes added: ‘While industry discussions are ongoing, BNPL users can take proactive steps now to protect their credit profiles, such as staying on top of repayments and treating BNPL like any other credit product. Good financial habits will always be the best safeguard, and understanding the factors impacting your credit score is a good place to start.’

So, what can BNPL users do right now to safeguard their credit scores and borrowing power? Here are some proactive measures to consider:

1. Treat BNPL as a credit commitment. With the impending regulations, it’s wise to manage BNPL transactions with the same diligence as any other credit product, such as a credit card or personal loan.
2. Spend within your means. BNPL services can tempt consumers into overspending. Before purchasing, ensure you can meet the repayment obligations without overextending yourself financially.
3. Maintain timely repayments. Late or missed payments can have a detrimental effect on your credit score. Automate your payments or set reminders to ensure you pay on time.
4. Limit your BNPL accounts. Multiple active BNPL accounts can signal to lenders that you’re a higher risk, potentially affecting your borrowing capacity. Keep your BNPL usage to a minimum.
5. Be cautious with applications. Applying for several BNPL services quickly can indicate financial distress, which may lower your credit score.
6. Regularly monitor your credit score. Stay informed about the factors influencing your credit score to make better financial choices. MONEYME offers a free credit score tool within its mobile app, allowing users to track and manage their credit health easily.

As we navigate these changes, BNPL users must adopt good financial habits and stay informed. The recorded BNPL data and lenders’ interpretation of that data will significantly influence lending decisions.

By taking control of your financial behaviour now, you can mitigate the risk of negative impacts on your credit score and preserve your borrowing power.

Have you found them helpful, or have they complicated your financial situation? What measures are you taking to prepare for the new regulations? Join the conversation in the comments below, and let’s navigate these changes together.

Also read: Here’s how you can recover from a crippling Christmas credit card debt!