Title: 'Buy now, pay later' purchases can now affect your credit score - What does this mean?
The world of finance has seen an unprecedented shift in recent years with the rise of "buy now, pay later" (BNPL) loans. These loans have become increasingly popular among shoppers who prefer to split their payments into installments rather than paying for a purchase upfront. However, things are about to change as credit scoring company FICO recently announced that it will incorporate data from BNPL loans into some of its credit scores.
BNPL services like Affirm and Klarna have become ubiquitous when shopping online, offering customers the option to pay in installments with no interest if they pay on time or split their payments over a longer period with interest. According to the Federal Reserve, 15% of American adults had used this type of payment within the previous 12 months.
FICO scores are crucial for lenders when assessing an individual's creditworthiness and deciding whether to offer them a loan or a credit card at what rate. Until now, these scores did not include data about any BNPL loans. However, starting in the fall, two of FICO's scoring products will incorporate this information.
The inclusion of BNPL data into FICO scores reflects the growing importance of these services in managing personal finances. Julie May, vice president and general manager of business-to-business scores at FICO, explains that "buy now, pay later is becoming a really big part of how people are managing their finances, and so FICO wanted to be able to manage and reflect that shift."
The potential implications of this change are significant. For one, it means that individuals who rely heavily on BNPL services may see an impact on their credit scores if they fail to make timely payments or exceed their borrowing limits. On the other hand, responsible use of these loans could help improve a person's credit score by demonstrating their ability to manage debt effectively.
From my perspective, this development signifies the evolving nature of consumer finance and highlights the importance of staying informed about new financial products and services that can affect our creditworthiness. As more people turn to BNPL options for convenience and flexibility, it's crucial to understand how these choices may impact our long-term financial health.
In conclusion, the integration of buy now, pay later data into FICO scores marks a significant shift in the world of consumer finance. It underscores the growing importance of BNPL services and emphasizes the need for individuals to be mindful of their borrowing habits when using these loans. As we navigate this new financial landscape, it's essential to stay informed about how our choices can impact our credit scores and overall financial well-being.
Source: [Original Article](https://www.npr.org/2025/07/05/nx-s1-5448793/credit-score-fico-buy-now-pay-later-affirm-klarna) #'buy
Check out my AI projects on <a href='https://huggingface.co/ghostail'>Hugging Face</a>, join our community on <a href='https://discord.com/invite/zgKZUJ6V8z'>Discord</a>, and explore my services at <a href='https://ghostai.pro'>GhostAI</a>!