Opting to “purchase now, pay later” (BNPL) might quickly have an effect on your credit score rating.
FICO, the agency that determines credit score scores utilized by 90% of the highest U.S. lenders, introduced on Monday that beginning this fall, it is going to take the unprecedented step of incorporating BNPL histories into its credit score scores.
FICO launched two new credit score scores that take BNPL under consideration: the FICO Rating 10 BNPL and the FICO Rating 10 T BNPL. It’s the first credit score scores from a number one supplier to incorporate BNPL knowledge, and marks the primary time FICO has launched scores to account for a sort of mortgage.
Associated: There Are New Guidelines for ‘Purchase Now, Pay Later’ Packages — This is What to Know
The 2 scores, can be provided side-by-side subsequent to variations of the FICO rating with out BNPL at no further price, in order that lenders could have an entire image of an individual’s creditworthiness. FICO acknowledged that the expansion of BNPL loans led to its determination.
“Purchase Now, Pay Later loans are enjoying an more and more essential function in shoppers’ monetary lives,” Julie Might, vp and common supervisor of B2B Scores at FICO, acknowledged in a press launch. “By increasing our FICO Rating 10 Suite with new fashions designed to include BNPL knowledge, we’re enabling lenders to extra precisely consider credit score readiness, particularly for shoppers whose first credit score expertise is thru BNPL merchandise.”
Many BNPL loans aren’t reported to credit score bureaus. Affirm, a BNPL supplier that holds 35% of the U.S. market, solely started reporting all new installment loans to the credit score bureaus Experian and TransUnion in April.
Klarna, one other BNPL firm, solely shares data with credit score bureaus for longer-term, 24-month loans and doesn’t share details about shorter-term loans like ‘Pay in 4″ installments.
FICO’s transfer to incorporate BNPL in two new credit score scores arrives because the service grows in reputation. In response to knowledge from analysis agency Emarketer, BNPL transactions are anticipated to achieve $108 billion this 12 months, up from $94 billion final 12 months. Capital One Procuring Analysis discovered that almost 86.5 million U.S. customers used BNPL in 2024, up almost 7% year-over-year, with a mean mortgage dimension of $135. The loans cowl every part from televisions to groceries.
Associated: Klarna’s CEO Used an AI Clone of Himself to Report Quarterly Earnings. This is Why.
Particular person BNPL suppliers are additionally reporting accelerated progress. Klarna’s first quarter 2025 outcomes final month confirmed that the corporate reached 100 million lively prospects within the quarter, a record-high and the quickest progress in two years. The U.S. accounted for 33% of Klarna’s income progress within the quarter.
In the meantime, Affirm’s gross merchandise quantity hit $8.6 billion in first-quarter earnings reported final month, a rise of 36% from the identical interval final 12 months.
Opting to “purchase now, pay later” (BNPL) might quickly have an effect on your credit score rating.
FICO, the agency that determines credit score scores utilized by 90% of the highest U.S. lenders, introduced on Monday that beginning this fall, it is going to take the unprecedented step of incorporating BNPL histories into its credit score scores.
FICO launched two new credit score scores that take BNPL under consideration: the FICO Rating 10 BNPL and the FICO Rating 10 T BNPL. It’s the first credit score scores from a number one supplier to incorporate BNPL knowledge, and marks the primary time FICO has launched scores to account for a sort of mortgage.
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