Written by: Eric Bank
Edited by: Lillian Guevara-Castro
Reviewed by: Adam West
Key Takeaways
- The two new FICO models — Score 10 BNPL and Score 10 T BNPL — bring data from Buy Now, Pay Later (BNPL) to credit scoring for the first time.
- Lenders may realize more precise risk assessments, better predictive accuracy, and thin-file borrowing access.
- The change is of great importance for underwriting, consumer access, and competition in credit markets.
FICO, the leading credit scoring company in the U.S., is launching two revised models this fall that include Buy Now, Pay Later (BNPL) loans. FICO Score 10 BNPL and FICO Score 10 T BNPL aim to bring transparency to a form of credit that has long avoided the credit radar.
Unlike credit cards or traditional installment loans, BNPL services offer quick, low-friction financing that doesn’t appear on credit reports. That invisibility has created gaps in the risk profiles lenders use to make decisions, making it difficult to distinguish between safe borrowers and those who are overextended.
These short-term, interest-free loans have exploded in popularity, especially among younger consumers and those with thin or no credit history. BNPL should hit $108 billion this year — versus $94 billion in 2024. But the tradeoff for convenience is risk — especially when consumers juggle several loans across different BNPL providers.
As BNPL continues to grow rapidly in usage, the introduction of FICO Score 10 BNPL and FICO Score 10 T BNPL couldn’t have come at a more opportune moment for lenders. With credit markets tightening and regulators eyeing consumer protections, lenders need all the data they can get to assess today’s borrowers accurately.
Why BNPL Poses Scoring Challenges
BNPL plans typically break down purchases into four payments to be made in six weeks. The plans have become very popular in recent years, but the legacy scoring models have not done a very good job of including them. BNPLs aren’t revolving debt or car notes.
And to add to the confusion, most BNPL lenders have not historically reported the loans.
That’s starting to change. Affirm, the largest U.S.-based BNPL lender, for instance, now reports to the Experian credit bureau, and others are likely to follow.
This shift brings greater visibility but also challenges traditional credit evaluation norms.
Lenders must now differentiate between responsible BNPL use and risky stacking behavior, which existing models weren’t built to handle.
The broader concern is how quickly these loans can pile up. Without accurate modeling, high-frequency BNPL borrowing may mimic red-flag behavior from revolving accounts, even though the repayment structure is fundamentally different.
Inside FICO’s BNPL Data Approach
“Buy Now, Pay Later loans are increasingly becoming a more substantial part of consumers’ financing lives,” said Julie May, B2B Scores vice president and general manager at FICO.
“By introducing new models engineered to incorporate BNPL data along with the FICO Score 10 Suite, lenders can more effectively measure credit readiness.”
Having worked with Affirm for a year, FICO tested its approach using data from over 500,000 consumers. Volume was the company’s biggest headache. Most consumers had multiple BNPL loans at a time, something older models would classify as highly questionable.
As a reaction, FICO implemented logic to bundle multiple BNPL accounts. In their tests, they found that for more than 85% of consumers, inclusion of BNPL data led to changes in their scores of less than 10 points. Those who had five or more loans typically had no penalty at all.
This affords lenders a look at debt that they’ve had to approximate before. That means fewer surprises, more accurate underwriting, and room to approve borrowers previously opaque — like young adults or newcomers who responsibly used BNPL services but who have not yet built a conventional credit history.
How Lenders Benefit
That’s more than a technical tweak. “Our clients tell us that FICO’s initiative to include BNPL data in credit scoring is a progressive step that acknowledges the evolving landscape of consumer financing,” added May.
“By capturing a broader view of consumer credit behavior, lenders believe they can make more informed decisions, ultimately benefiting both the industry and consumers.”
Adding BNPL data will allow lenders to shape a more precise portrait of potential borrowers and credit behavior.
The Consumer Financial Protection Bureau is wary of “loan stacking,” where consumers have multiple BNPL accounts simultaneously. Without clear visibility on those obligations, lenders may inaccurately presume creditworthiness.
By combining BNPL usage with score models, FICO’s update allows lenders to better look ahead and act preventively, for instance, by raising limits or making terms more stringent prior to problems arising.
Yet much of the puzzle remains in the hands of the credit bureaus. Experian, Equifax, and TransUnion will be the final determiner of whether and how data on BNPL is shared with lenders. Meanwhile, for the most part, they’re only showing that data to consumers. Lenders will get the new scores for free, but adoption may be gradual.
The new models are arriving at a moment when creditors are rethinking the time-honored credit models. Inflation, shifts in consumption, and leaps in technology are rewriting the scripts on borrowing and paying back. Previous maps no longer cover the whole territory. FICO’s BNPL scores attempt to incorporate the missing pieces.
Whether lenders rush to accept them or test them slowly, the trend is a sure thing: Credit decisions down the line will be based on a more inclusive basis of individuals’ debt-handling ability — even debt that’s not attached to a card or credit line.
