US Edition
Buy Now, Pay Later Loans Will Factor in to Americans’ Credit Scores
- FICO announced this week that it will include buy-now-pay-later loans in credit reports and scores to better reflect consumer credit behavior.
- The change follows a yearlong study showing many BNPL loans open rapidly, while consumer groups caution these loans could increase debt risks among users.
- BNPL loans allow consumers, especially younger ones, to split purchases into installments often without interest, but many users face late fees and difficulty tracking spending.
- Julie May of FICO called the initiative a progressive step and Ted Rossman of Bankrate described it as "eye-catching" for enhancing credit activity representation.
- FICO plans to launch new BNPL-inclusive scores this fall, which could improve lenders’ evaluations and promote financial inclusion despite ongoing regulatory and consumer concerns.
112 Articles
112 Articles
Microloan Apps May Be Poised to Destroy the Economy
We love microlending, don't we, folks? Unlike old-school credit cards, with their days-long approval processes and prior credit minimums, buy-now, pay-later (BNPL) apps — companies like Klarna and Afterpay — offer hard-up customers instant financing options to buy the junk they crave the instant they see it. In the United States, purchases made with these apps currently don't even affect your FICO credit score — or at least, they never used to. …
Gen Z’s beloved Buy Now, Pay Later will soon impact credit scores, which could pose risks for vulnerable borrowers
Hundreds of millions of ‘Buy Now, Pay Later’ loans will soon affect credit scores for millions of Americans who use the loans to buy clothing, furniture, concert tickets, and takeout. Scoring company FICO said Monday that it is rolling out a new model that factors the short-term loans into their consumer scores. A majority of lenders use FICO scores to determine a borrower’s credit worthiness. Previously, the loans had been excluded, though Buy …
FICO to Include Buy Now, Pay Later Data in Consumer Credit Scores
Starting later this year, Buy Now, Pay Later (BNPL) loans will be included in Americans' credit scores, giving lenders a clearer view of repayment behaviour. FICO has announced that its new models, FICO Score 10 and FICO Score 10 T, will incorporate BNPL data, marking the first time major credit scores reflect this growing payment method. BNPL loans let consumers split purchases into smaller payments, often for items like clothes, flights, or gr…
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