FICO Announces Plans to Include BNPL Data in Credit Scores

FICO recently announced two credit scores that will include consumers’ record of buy now, pay later (BNPL) loans, both of which will launch in the fall. FICO Score 10 BNPL and FICO Score 10 T BNPL are meant to account for consumers’ increasing use of BNPL loans, giving lenders’ more visibility into repayment habits, and enhancing financial inclusion.

“By expanding our FICO Score 10 Suite with new models designed to incorporate BNPL data, we’re enabling lenders to more accurately evaluate credit readiness, especially for consumers whose first credit experience is through BNPL products,” said Julie May, vice president and general manager of B2B scores at FICO, according to PYMNTS.

The New York Times highlighted that FICO’s credit scores are used by 90 percent of U.S. lenders, and noted that the growth of BNPL loans led to this decision. Americans purchased over $116.23 billion in goods and services using BNPL products in 2023, up from $2 billion in 2019. BNPL loans offer an efficient way to split purchases into smaller payments.

In February, FICO said it planned to add BNPL to credit scores analysis after a joint study with BNPL company Affirm. “Our findings show that the inclusion of BNPL data via our innovative treatment can drive score increases for some consumers, while improving model risk performance for lenders,” said Ethan Dornhelm, vice president of scores and predictive analytics at FICO.

In March, Affirm announced that it planned to share information about its payment plans to Experian, but new loan reporting would not be factored into consumers’ credit scores until the near term, when new scoring models are created.

“Having all loans reflected in a consumer’s financial profile will help protect and empower borrowers,” said Affirm President Libor Michalek in a press release at the time.