FICO to Add ‘Buy Now, Pay Later’ Payments to Credit Scoring—What to Know

Published: 2/24/2025, 4:38:24 PM EST

FICO to Add ‘Buy Now, Pay Later’ Payments to Credit Scoring—What to Know — Visa credit cards arranged on a desk in San Francisco, in a file photo. (Justin Sullivan/Getty Images)

Credit scoring giant FICO is rolling out a new credit scoring feature that will include “Buy Now, Pay Later” (BNPL) loans. No date has been set for the addition, but the decision comes after FICO completed a one-year study with the BNPL payment network company Affirm.

A BNPL loan is a type of short-term financing that allows consumers to purchase an item and to repay the loan over time. They generally do not charge interest for consumers who keep up with repayments.

“Given the growing popularity of BNPL loans, understanding how to effectively capture the benefit that BNPL data can have on FICO Scores is crucial to all stakeholders in the credit ecosystem,” said Ethan Dornhelm, vice president of scores and predictive analytics at FICO in a statement. “Our findings show that including BNPL data via our innovative treatment can drive score increases for some consumers while improving model risk performance for lenders.”

What the FICO/Affirm Study Found

The FICO study, which tracked 500,000 Affirm customers compared against a “benchmark population” of non-BNPL customers, found that BNPL loan and payment activity likely have “potential benefits and impacts” on consumer credit scores.

The study also highlighted the positive and negative impacts of including FICO scores in the calculations of widely used credit scoring companies like Experian, Equifax, and TransUnion. The research “showed that this treatment can improve model performance and increase FICO Scores for some BNPL borrowers.”

Additionally, most consumers in the study who had five or more Affirm BNPL loans saw higher or no changes in their FICO scores. The impact on scores across other cases also saw “improvement to no adverse effects.”

After reviewing the study results, FICO analysts say the data was informative and helpful to lenders and creditors, adding that developing “proprietary treatment” of BNPL data for the credit-scoring marketplace is a good idea.

“We are eager to arm lenders with a tool that allows them to incorporate BNPL data into their credit evaluation process, demonstrating FICO’s commitment to innovation, transparency, and inclusivity in lending,” said Julie May, VP and GM of scores at FICO in a statement.

Benefits to Users After FICO Change

For BNPLs in the digital retail marketplace, FICO believes the credit scoring change should help lenders and borrowers.

“Lenders benefit from BNPL being on a consumer’s credit since they get a better idea of a consumer's monthly debt payments,” said Ashley Morgan, a debt and bankruptcy lawyer at Virginia-based Ashley F. Morgan Law, in a statement to NTD. “Since a BNPL account allows consumers to pay over time, a lender better understands how much in revolving expense or available credit a consumer has. The reporting change creates a better understanding of a consumer's financial profile.”

The FICO move would also aid consumers, especially those without a substantial credit track record.

“It will help those with limited credit history,” Morgan noted. “If you have a short credit history, showing that you are paying your BNPL payments on time will help your credit. Since there is no interest, it is also a good way to open an account and get a positive payment history on their credit fairly easily.”

Consumers Who Can’t Get a Credit Card

Consumers without significant access to credit cards may benefit, too.

“Many consumers use BNPL in lieu of credit cards because they don’t have them,” Erica Sandberg, a consumer finance expert with BadCredit.org, told NTD. “In that case, they may have minimal data on credit reports, leading to thin files and no or low scores. Therefore, adding BNPL information into the scoring systems is helping people who may very well be good credit risks create positive scores.”

Frequent BNPL Users Should Benefit Too

Consumers who regularly use Buy Now, Pay Later retail options and who pay their bills on time should see credit score improvement.

“If someone has one $100 BNPL transaction, it isn't going to change someone's creditworthiness,” Morgan said. “But with BNPL, people can have hundreds of dollars of charges that are being paid over a period of time. The higher the amount on the BNPL, the more important it would be to a lender.”

Growing Impact on Credit Scores

When the FICO shift to BNPL loans starts moving through the U.S. credit reporting system, consumers who use short-term loans should soon begin to see changes in their scores.

“At first, the impact will be small, but if they have a long and steady history of borrowing and repaying with these credit products, the difference in their scores should be significant,” Sandberg said.

Key Takeaways

FICO’s use of Buy Now, Pay Later payments in credit scores stems from its BNPL/Affirm Study. Here are some key takeaways from the report.

Consumers generally saw higher scores or no score changes–but no negative score changes–for most study participants with five or more Affirm BNPL loans.
Impacts on FICO Score predictiveness ranged from modest improvement to no adverse effects.
Based on the study’s results analysis, FICO says it’s developing a proprietary treatment of BNPL data for the credit-scoring marketplace, although no launch date has been set.