Pretty much since their introduction, buy now, pay later plans have been a point of contention regarding their impact on users’ credit scores. BNPL providers worried that sharing users’ data could harm them in the long run. But now, Affirm has teamed up with Fair Isaac Corp. (FICO) to show that BNPL loans have little impact on credit scores—if anything, they may improve them.
In a yearlong study, FICO examined the effects of BNPL loans taken out through Affirm. In most cases, the impact was negligible. New BNPL loans affected credit scores by approximately 10 points for more than 85% of the 500,000-plus Affirm customers surveyed.
However, that movement was more likely to be positive than negative. Most consumers who had recently taken out five or more Affirm BNPL loans either saw their scores increase or experienced no change.
FICO stated it would use this research to develop a proprietary method for incorporating BNPL data into the credit-scoring marketplace. This could significantly alter how these loans affect credit scores.
The Battle to Report BNPL
BNPL providers have long been reluctant to share their data with credit agencies.
“One of the early selling points for BNPL firms was that they were not sharing data with the credit bureaus,” said Ben Danner, Senior Analyst, Credit and Commercial at Javelin Strategy & Research. “The idea was that this lack of sharing would be attractive to consumers, particularly those concerned with their credit scores.
“However, with potential regulatory changes on the horizon, it makes sense for BNPL vendors to pivot towards a strategy that markets these loans as a credit enhancement tool,” he said. “This study demonstrates that integrating BNPL loan history into a credit score is widely beneficial and is predictive of payment behavior.”
These changes have been brewing for a couple of years. In a June 2022 blog post, the CFPB requested that the “consumer reporting companies should incorporate the BNPL data into core credit files as soon as possible.” However, following that request, the only major BNPL provider to begin reporting its loan data was Affirm.
When Apple announced in February 2024 that it would start reporting loans from its Apple Pay Later service to Experian, many observers expected more BNPL services to follow suit. Yet, none did, and Apple ultimately shut down Apple Pay Later.
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