Consumers are increasingly turning to buy now, pay later (BNPL) services due to their accessibility and ease of use. The growing reliance on these payment plans spans across various income levels, with both low and high earners utilizing them for purchases, from daily necessities to luxury goods. Some individuals without traditional credit histories view BNPL as a practical financing option. As BNPL data begins to be integrated into credit reporting, its impact on credit scores is becoming more evident. The way this financial tool is assessed by lenders could influence borrowing decisions and credit accessibility in the coming years.
Earlier studies on BNPL adoption indicated that many users turned to these services due to limited access to traditional credit options. While initial reports emphasized the convenience of installment payments, more recent analyses suggest that the inclusion of BNPL transactions in credit reports could influence financial behavior. Lenders and financial institutions have started assessing BNPL repayment history to determine creditworthiness, a shift from previous years when these transactions were largely unreported. The growing interest from credit agencies in tracking BNPL usage reflects its increasing role in consumer finance.
How Is BNPL Credit Reporting Evolving?
Affirm has announced that starting next month, it will provide Experian with data on all its payment plans. This reporting will extend beyond long-term installment loans to include biweekly and single-payment plans. By incorporating these transactions into credit history evaluations, financial institutions may gain a broader perspective on consumer repayment patterns.
FICO has also indicated plans to factor BNPL transactions into its scoring models. Joint research with Affirm revealed that the majority of consumers who opened BNPL accounts experienced either no negative impact or a slight improvement in their credit scores. The ability to track BNPL usage could help lenders refine their risk assessments while influencing how consumers manage their financial obligations.
Will BNPL Reporting Affect Borrowing Behavior?
The integration of BNPL data into credit reports may prompt users to approach short-term lending more cautiously. Analysts suggest that consumers will likely avoid accumulating excessive BNPL debt to maintain favorable credit profiles. Credit reporting agencies such as Experian and Equifax are expected to refine their methods to incorporate BNPL data while ensuring borrowers are assessed accurately.
Some BNPL providers maintain that their users already exhibit strong repayment behavior.
Klarna reported in its SEC filing that its 30+ day delinquency rate is 72% lower than the U.S. credit card industry average, standing at 1.2%.
Similarly, Affirm disclosed that its delinquency rates by the end of last year were around 2.5%, a figure that aligns with historical trends.
Financial institutions are still adjusting to the inclusion of BNPL performance in credit evaluations, making it uncertain how it will ultimately affect lending decisions. As reporting mechanisms continue to develop, consumers and lenders will need to adapt to the changing credit landscape. For individuals who have limited access to traditional credit, a well-maintained BNPL repayment history could improve their financial standing. Meanwhile, regulators and credit agencies will likely continue assessing the long-term implications of BNPL reporting on credit markets.
