Buy Now, Pay Later Payment History Could Soon Impact Credit Scores
Last updated July 9, 2025
FICO, the company behind the most widely used credit scoring models in the U.S., has developed two new algorithms that, for the first time, will incorporate buy now, pay later (BNPL) payment history.
The move reflects the rapid growth of these short-term, interest-free loans now used by millions of Americans to finance everything from TVs to fast food. BNPL transactions in the U.S. are expected to total $122 billion this year, according to CapitalOne Shopping.
Julie May, a vice president at FICO, said the company’s updated models will help lenders “more accurately evaluate credit readiness, especially for consumers whose first credit experience is through BNPL products.” The change, she noted, could help more people qualify for credit.
Of course, there will be a downside for some consumers: FICO will lower credit scores for those who made late payments. More than four in 10 (41 percent) of BNPL borrowers said they paid late on one of their loans in the past year, up from 34 percent just a year ago, according to a recent LendingTree survey.
The country’s largest lenders told FICO they wanted a scoring model that incorporated BNPL data, enabling them to make more informed decisions about extending credit.
The challenge for FICO was how to treat BNPL loans, which are different from credit cards, auto loans, and other traditional lending products. Most BNPL loans are for small amounts, averaging $135, according to Capital One, and are paid back in six weeks. Another unique feature: Many consumers utilize multiple BNPL loans at the same time.
To determine the impact of BNPL loans, FICO conducted a 12-month study with Affirm, a major lender. They compared the FICO scores of more than 500,000 customers who opened at least one new Affirm BNPL loan against a benchmark group of consumers without such loans.
The study showed that using BNPL data resulted in “modest” score increases or no score changes for the majority of those who had recently obtained five or more Affirm BNPL loans, while improving the performance of the risk model for lenders.
One Small Step
Lenders decide which credit scoring model to use. Even if FICO’s new BNPL scoring models are widely adopted, the overall impact on individual consumers might be minimal.
“What really matters is moving your credit score from, say, 620 to 680, or even more, in terms of whether you can qualify for good credit,” said Adam Rust, director of financial services at the Consumer Federation of America. “If you take one BNPL loan and repay it, maybe that moves your credit score a few points, but no more. And so, it’s a difference, perhaps without a distinction in your ability to access credit or secure housing.”
On the other hand, a BNPL account reported as delinquent might have a dramatic negative impact for borrowers who haven’t taken out other types of credit. One reason BNPL became so popular is that getting approved for most transactions doesn’t require credit checks.
It’s Still a Loan
BNPL lenders are selling convenience and flexibility, offering “pay in four” interest-free loans that give you “more control over your budget.” However, with some pay-later lenders, there are penalty fees of $7 or $8 for each missed payment. And if you don’t have enough money in your bank account when the BNPL provider makes a withdrawal, you could incur an overdraft fee. The current average overdraft fee is $27 per transaction, according to Bankrate.com.
“Before you enter into one of these types of plans, you want to read the fine print, understand how much money you owe, and at what intervals,” said Sara Rathner, a personal finance expert at NerdWallet.
Ask yourself some important questions, Rathner said: “At what point will you be done paying this item off? Where else is your money going every month? Do you have the funds available after paying all your other bills to also make these payments, or do you run the risk of getting in over your head and missing payments?”
Debt counselors caution that it’s easy to miss payments and rack up fees when juggling multiple pay-later loans from different companies—it’s called “loan stacking.”
The smart way to use BNPL, they say, is one purchase at a time—and only for something you can afford.
More to Come?
If FICO’s new scoring model proves valuable to lenders, it may prompt the big three credit bureaus—Equifax, Experian, and TransUnion—to do more with BNPL data. Affirm and Klarna are now providing payment histories to some bureaus, but they are not yet using it to generate credit scores. But BNPL payment info may be considered by lenders themselves when considering loans.
Experian told Checkbook it is “working closely with leading BNPL providers” to expand the reporting of this payment data. Equifax and TransUnion did not respond to our requests for information.
Consumer advocates caution that as BNPL financing becomes integrated into credit reporting and credit scoring, it must be taken as seriously as any other credit product. Payment history accounts for 35 percent of your credit score, making it the most important factor in the calculation.
“It’s no longer the case that the rules are different for these pay-later loans,” Rust said. “Going forward, there’s no hiding from accountability. If you don’t pay on time, it could hurt your credit, and that’s something consumers should be very clear about. Hopefully, reporting of BNPL to the credit bureaus will ensure people get the credit they can afford, but not so much that they become overextended.”
More from Checkbook: Buy Now, Pay Later, Often a Debt Trap
Contributing editor Herb Weisbaum (“The ConsumerMan”) is an Emmy award-winning broadcaster and one of America's top consumer experts. He has been protecting consumers for more than 40 years, having covered the consumer beat for CBS News, The Today Show, and NBCNews.com. You can also find him on Facebook, Blue Sky, X, Instagram, and at ConsumerMan.com.