FICO to Include Buy Now Pay Later Data in New Credit Score Models

FICO announced plans to roll out updated credit score models later this year that will incorporate Buy Now Pay Later (BNPL) loan data, giving lenders insight into a fast-growing but largely untracked area of consumer borrowing.

The new scores, part of FICO Score 10 and FICO Score 10 T, will take into account consumers’ repayment behavior on BNPL purchases, which are often used as an alternative to credit cards for spreading out larger or unexpected expenses.

For some borrowers, this shift could offer a new opportunity to build credit by showing on-time payments. However, missed payments could negatively impact scores, making BNPL a potential credit booster or a risk, depending on how the loans are managed.

“A lot of BNPL users are often young people who don’t have long credit histories,” Ted Rossman, chief credit analyst at Bankrate, told CNN. “That’s the more optimistic use case, that these people could be brought into the credit system. And if they use Buy Now, Pay Later responsibly, it should help them.”

Source: CNN

FICO to Include Buy Now Pay Later Data in New Credit Score Models  was originally published on wbt.com