It’s fairly well understood that if you apply for credit, then your credit provider will contact a credit reporting agency to make enquiries about your credit history.

A lesser known fact is that too many of these enquiries can lower your credit score. A lower credit score can make your loan harder to get or more expensive, and some of our clients have discovered there are also more ways to chalk up new credit enquiries than ever before.

A short term payment agreement for a retail purchase might not be a regulated credit contract, but it can still have a similar effect on your credit file. AfterPay and ZipPay are two examples where four easy payments can mean one more credit enquiry.

Recently one of my clients was offered the ability to pay for her dental work over a few payments and she thought it was a great idea. She later realised that she had signed up to AfterPay and it appeared on her credit report.

While most of us have been on-line and checked a box that says we’ve read the terms and conditions when we haven’t, when it comes to financial products you really should read them. That’s because even the smallest financial decisions can have an effect on your future options.

These traps are not just a problem for people who want a home loan. They can affect you even if you are already pre-qualified for one. For example, if you are pre-approved to buy a home, your lender will still review your credit file when your application is submitted. A change to your circumstances in the meantime could still affect your options.

So before deciding how to pay for those Christmas presents this year, remember that ‘buy now pay later’ could mean paying later in more ways than one.