Purchase now, pay later loans will now influence People’ credit score scores

FICO mentioned on Monday that it’ll incorporate purchase now, pay later (BNPL) knowledge into credit score scores because the cost technique surges in recognition. 

The FICO Rating 10 BNPL and FICO Rating 10 T BNPL would be the first credit score scores from a number one credit score scoring supplier to include this knowledge. FICO mentioned the scores characterize a “significant advancement in credit scoring, accounting for the growing importance” of such loans within the U.S. credit score ecosystem.

“Buy Now, Pay Later loans are playing an increasingly important role in consumers’ financial lives,” Julie Might, vp of B2B Scores at FICO, mentioned. By increasing its FICO Rating 10 Suite with these new fashions, Might mentioned the corporate is “enabling lenders to more accurately evaluate credit readiness, especially for consumers whose first credit experience is through BNPL products.”

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FICO mentioned it utilized enter from the biggest lenders within the U.S. and that there was a broad consensus that integrating BNPL knowledge into credit score scoring “is a critical advancement that allows lenders to make more informed, accurate decisions while responsibly expanding credit access.”

The AfterPay web site on a laptop computer pc organized in Germantown, New York, US, on Saturday, Might 4, 2024.  (Gabby Jones/Bloomberg by way of Getty Photos / Getty Photos)

FICO mentioned these scores will present lenders with better visibility into shoppers’ reimbursement behaviors and can allow a extra complete view of their credit score readiness.

Lending companies reminiscent of Afterpay, Klarna, Affirm and PayPal have risen to prominence as cash-strapped shoppers regarded to stretch their wallets as they cope with persisting inflation, excessive rates of interest and scholar mortgage funds, which resumed in October 2023 after a pause because of the COVID-19 pandemic.  

The companies enable shoppers to make purchases and pay for them in installments, usually with no curiosity or charges. Nevertheless, curiosity is tacked on to sure plans, and shoppers can get hit with a late payment if they do not have sufficient funds of their account to cowl the funds.

A Klarna commercial on the Metro Middle metro station in Washington, D.C., on June 3, 2025.  (Stefani Reynolds/Bloomberg by way of Getty Photos / Getty Photos)

RISKS OF BUY NOW, PAY LATER: ‘TICKET TO OVERSPENDING,’ EXPERT SAYS

Historically, they’ve been utilized for big-ticket gadgets. Nevertheless, these purchase now, pay later financing choices have change into so common within the present financial setting, {that a} rising variety of shoppers are even leveraging them to pay for requirements like meals. 

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Knowledge from an April LendingTree report reveals that 25% of such customers have used the service to purchase groceries, up from 14% a 12 months in the past.