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Buy Now, Pay Later loans will factor in to Americans’ credit scores
How well — or how poorly — Americans are managing their Buy Now, Pay Later loans soon could be reflected in their credit scores.
FICO plans to launch a suite of credit scores later this year that incorporate BNPL data, providing lenders a window into what’s been a big blind spot: consumers’ repayment behavior on these increasingly popular installment loans. BNPL loans can serve as an alternative to credit cards and are used by consumers who are seeking more flexible payment options, who want to overcome a tight financial spot, or who are looking to smooth out some bigger transactions to better meet their budgets. FICO developed a secret sauce for how factors such as payment history, balances and the like feed into its scoring system; however, those ingredients come from what the lenders report to the credit bureaus.
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