FICO will start including Buy Now, Pay Later (BNPL) loan data in credit scores beginning this fall. The company is launching two new scoring models: FICO Score 10 BNPL and FICO Score 10 T BNPL.
New Scores Available at No Extra Cost
Lenders will get access to these new scores alongside existing FICO models at no additional charge. This allows them to evaluate how consumers handle BNPL payments while still using traditional credit scoring methods.
The move responds to the rapid growth of BNPL services. Over 90 million Americans are expected to use BNPL products this year.
Focus on Financial Inclusion
FICO says including BNPL data will help more people access credit, especially younger consumers and those with limited credit histories. For many people, BNPL services are their first experience with credit products.
The new scores will give lenders better insight into how consumers manage different types of debt. This could lead to more accurate assessments of who is ready for traditional credit products.
Risks and Benefits
Adding BNPL data creates both opportunities and risks for consumers. Those who manage BNPL loans responsibly may see their credit scores improve. However, missed payments or overspending could hurt credit ratings.
Surveys show nearly half of BNPL users have experienced problems like overspending or late payments. The convenience of BNPL can lead to taking on too much debt.
Year-Long Study Led to Changes
FICO developed the new scores after studying BNPL user behavior for a year. The research identified unique patterns, such as consumers opening multiple BNPL loans in short periods.
The new scoring models capture these behaviors to provide a more complete picture of borrower risk.
Impact on Consumers
Starting this fall, how people manage their BNPL loans will directly affect their credit scores. Consumers who pay on time may benefit, while those who miss payments could see their scores drop.
This change makes it more important for BNPL users to treat these loans seriously and manage them responsibly.
