The “Buy Now, Pay Later” trend is picking up steam, with the U.S. BNPL market
expected to grow from $109 billion in value in 2024 to $184 billion by 2030. Market growth averages 204 percent annually from 2021 to 2024 and shows few signs of slowing down as consumers embrace so-called “installment plan” payments via major industry firms like Affirm and Klarna.
Credit scoring agencies largely overlooked BNPL payment plans in the short history of payment technology, but that trend will change in 2025. On April 1, consumers who use BNPL to buy everything from Galaxy phones to golf clubs began seeing purchases from Affirm appear on Experian credit reports, marking the first time BNPL loans were included in credit reports.
According to
company statements, the new BNPL credit scores won’t initially be factored into actual credit scores, but the San Francisco-based company said scores should be included “in the future as new credit scoring models are developed.”
Additionally, all payment activity, including on-time and late payments, will be included on Experian credit reports, and, for now at least, BNPL loans won’t appear on FICO or Vantage Score credit reports, which lenders and creditors widely use.
3 Big Takeaways
With consumer BNPL payments breaking new ground on the crediting reporting front, here are three other updates to know about the new Affirm-Experian BNPL alliance.1. Building More Robust Consumer Credit Histories
In taking the first big step to get BNPL payments factored into credit scores, Affirm executives say they offer another reason to leverage those installment loans.“Affirm operates on the principles of transparency and putting consumers first, which is why we have been actively engaged with Experian and across our industry to build upon our credit reporting practices,” said Libor Michalek, President at Affirm.
“Having all loans reflected in a consumer’s financial profile will help protect and empower borrowers. The buy now, pay later industry must evolve from simply providing flexible payment options to helping consumers build their credit histories and better manage their finances, and we are pleased to be taking this step with Experian, ” he added.
2. Uncle Sam Is Weighing In
While the Trump administration moves to cut staffing at major federal government agencies, the U.S. Consumer Financial Protection Bureau has laid the groundwork for more transparency from the BNPL market.In May 2024, the CFPB issued a
new rule that placed BNPL loans in the same regulatory realm as credit card providers, who have long included payment activity in credit scoring companies.
“Buy Now, Pay Later lenders must provide consumers some key legal protections and rights that apply to conventional credit cards,” the agency wrote. “These include a right to dispute charges and demand a refund from the lender after returning a product purchased with a Buy Now, Pay Later loan.”
The CFP also linked BNPL loans to credit cards in key areas, such as online checkouts at retail outlets and digital accounts at online consumer commerce platforms.
“Like conventional credit cards, Buy Now, Pay Later combines payment processing and credit services while charging transaction fees to merchants,” the agency noted. “Because Buy Now, Pay Later lenders will typically meet criteria under existing law and regulation as traditional credit card providers, they need to extend many of the same rights and protections as classic credit card providers. Importantly, these cover dispute and refund rights.”
3. Expect Other Credit Scoring Agencies to Follow Suit
While Experian is the first major credit reporting firm to add BNPL loans to its credit reports in standard credit scoring fashion, others are already planning initiatives.In early 2024, Equifax
began accepting BNPL consumer data from lenders, with the data being entered as “either revolving or installment accounts depending on how the BNPL provider chooses to list them.” Equifax is also rolling out bi-weekly BNPL credit reporting and has issued a major study on BNPL loans, noting that the average consumer loan was for four months and that borrowers who paid off their loans on time could see credit scores rise by 13% once they’re officially included on the credit report.
Transunion has also agreed to add BNPL loan payment activity on its credit reports, but the data is only visible to borrowers, not lenders.
TransUnion is also
accepting BNPL data, but BNPL accounts are visible only to consumers on their own reports and are currently not shared with lenders or scoring providers. As a result, BNPL data furnished to TransUnion does not currently affect credit decisions or scores.
While “the data will remain excluded from non-BNPL scores and attributes ... over time, BNPL data will likely be incorporated into credit scores and models,” the company noted in a recent
statement.
