FICO to incorporate buy-now-pay-later loans into credit scores

[BumRushDaShow]

Source: Axios

9 hours ago


FICO credit scores will begin incorporating buy-now-pay-later data for the first time.

Why it matters: With over 90 million Americans expected to use BNPL for purchases this year, critics argue that existing credit scores paint an incomplete picture of an individual's ability to pay back loans.

Driving the news: Fair Isaac Corp., which runs FICO, said Monday that it will launch two separate credit scores including BNPL data.

FICO Score 10 BNPL and FICO Score 10 T BNPL will "represent a significant advancement in credit scoring, accounting for the growing importance of BNPL loans in the U.S. credit ecosystem," the company said in a statement.

"These scores provide lenders with greater visibility into consumers' repayment behaviors, enabling a more comprehensive view of their credit readiness which ultimately improves the lending experience," FICO added.

The big question: Will the credit profile of borrowers improve or deteriorate after BNPL loans are integrated?

FICO and BNPL provider Affirm released a study in February simulating the credit score impact of BNPL loans. It showed that the "majority" of consumers with five or more BNPL loans from Affirm would experience "higher scores or no score changes."

Critics say that BNPL leads to "phantom debt" that could hurt credit scores. The Fed reported in May that "nearly one-fourth" of BNPL users paid late in 2024, up from 18% in 2023.

Read more: https://www.axios.com/2025/06/23/fico-credit-scores-bnpl-buy-now-pay-later

[FBaggins]

1. That makes sense to me

You are incurring a debt - so it makes sense for your behaviors related to that debt should influence your ability acquire financing in the future.

Critics say that BNPL leads to "phantom debt" that could hurt credit scores

But it isn't "phantom debt"... it's the real thing. You came home with a thing that you hadn't paid for yet and you then have to pay for it. It walks and quacks like a duck...

The big question: Will the credit profile of borrowers improve or deteriorate after BNPL loans are integrated?

That's a really good question - but I'd argue that in many cases it could improve credit scores. BNPL deals often go to people with little to no credit (or worse... bad credit). If they can actually get credit (pun not intended) for paying those deals on time... it should help improve their score.

[slightlv]

2. And this is one reason I'm not well-off!

Isn't BNPL already factored into credit scores, albeit indirectly, perhaps. I mean, anything you buy on a credit card is a BNPL deal, and any missed or late payments are reflected in your score.

Are these BNPL loans a different category than credit card or mortgage or car loans? How is it different and what types of goods does it represent? I honestly can't figure this one out... which is why I say, see why I'm so poor! (sigh)

[mathematic]

5. No, you've got it right. BNPL are essentially credit cards in practice.

BNPL products are a newly widespread credit product that compete as an alternative to credit cards. You use a BNPL product to buy anything you'd buy with a credit card, as long as the merchant accepts it. Like credit cards, and unlike mortgages or car loans, they're unsecured. Like mortgage or car loans but unlike credit cards, they set a fixed repayment term. Like all these loans, they can be paid off in full at any time.

They are a different category of credit than the other loans you've mentioned and will now be factored into credit scores according to this news story. I would have guessed they already were included but apparently they hadn't gotten around to it until now. For BNPL to affect your credit score two things have to happen, the BNPL lender needs to report your payments to a credit bureau and that credit bureau needs to incorporate that information into their credit scoring models.

[DENVERPOPS]

3. Would love to hear

Elizabeth Warrens take on this......

[ForgoTheConsequence]

4. FICO is a joke.

And so is the fact that we live in a country where people have to pay for necessities in installments.