Starting in the fall of 2025, FICO will roll out new credit scoring models called FICO® Score 10 BNPL and FICO® Score 10 T BNPL, which incorporate Buy Now, Pay Later (BNPL) loans into how your creditworthiness is evaluated. This marks the first time FICO scores, which are used for most major lending decisions in the U.S., will reflect information from these increasingly popular short-term installment loans.
Why This Matters
- BNPL loans let consumers split payments into installments, often without interest, through platforms like Affirm, Klarna, and Afterpay.
- Previously, BNPL activity was typically not reported to credit bureaus or included in core credit scores, allowing some consumers to take on “phantom debt” unseen by lenders.
- Now, FICO will capture these loans in certain scores, giving lenders a more complete picture of a borrower’s obligations and payment patterns.
How BNPL Will Appear on Credit Reports
- Only BNPL platforms that report to credit bureaus will impact your score under the new models (Affirm and Klarna, for instance, have begun reporting data to the major bureaus).
- Initially, only some lenders will use these new FICO models, meaning the effect on all types of borrowing, from credit cards to mortgages, will phase in over time.
Impact on Individuals’ Creditworthiness
The new FICO credit scoring models will have a big effect on individuals’ creditworthiness. If you repay your Buy Now, Pay Later (BNPL) loans on time, your credit score can improve, especially if you have a limited credit history. However, late or missed payments on BNPL loans will now be reported and can lower your score, just like missed credit card payments. Responsible BNPL use can help your credit, but missing payments or taking on too many loans can quickly hurt your borrowing power.
Positive Effects (If You Pay on Time)
- Successfully repaying BNPL loans on time can now boost your FICO score under the new models.
- On-time BNPL payments add a positive component to your payment history, the most important factor for credit scores.
- For individuals with limited credit history, positive BNPL repayment can help establish a track record of responsible borrowing.
Negative Effects (If You Miss Payments)
- Late or missed BNPL payments will hurt your credit score once reported; just like missing a credit card or loan payment.
- Repeated late payments or defaulting on multiple BNPL obligations could have a compounding negative impact.
Size of the Impact
- FICO and Affirm simulated the new scoring and found most users see a score movement resembling opening a new account, with typical changes of around 10 points.
- However, those who use five or more BNPL loans concurrently may see bigger score swings (positive or negative) based on their repayment habits.
Implications for Personal Borrowing
- Lenders will have greater visibility into all your obligations. This could reduce approval amounts or increase rates for consumers with substantial, unpaid BNPL debt.
- Good BNPL management can now make it easier to qualify for new loans, credit cards, or mortgages. But borrowers who miss payments may find it more difficult to access credit or face higher costs.
- Adoption of these new scores will roll out gradually but is expected to become standard in the years ahead. Consumers should expect that “invisible” BNPL debt is no longer hidden from view.
What You Should Do
- Monitor all forms of debt, including BNPL loans, as you would traditional loans and credit cards.
- Set up automatic payments or reminders for BNPL plans to avoid accidental missed payments.
- Regularly check your credit reports for accuracy, especially if you use BNPL services frequently.
- Be mindful that taking out many BNPL loans simultaneously can complicate your credit profile and potentially reduce your score.
Key Takeaways
FICO’s new credit scoring models will treat Buy Now, Pay Later activity as a core part of your credit profile for the first time. Timely repayment can boost your score, but missed payments can now undermine your creditworthiness just like any other loan or credit card debt. With 90 million Americans expected to use BNPL in 2025, these changes are set to reshape how lenders, and borrowers, view short-term installment credit.