FICO, a leading credit score company, has announced a significant change to its scoring model. Starting this fall, BNPL (Buy Now, Pay Later) options will be factored into consumer credit scores. This marks the first time these short-term, zero-interest loans have been included in credit evaluations.
BNPL data could benefit young consumers with limited credit history who use these payment plans, potentially improving their credit scores. However, for individuals who have experienced late payments with BNPL, this change could negatively impact their ability to secure mortgages, car loans, or apartment rentals.
Consumer advocates have raised concerns about “loan stacking,” where consumers accumulate multiple loans across different companies, leading to potential debt issues. The new FICO scores will offer lenders enhanced insight into consumers’ repayment behaviors, but not all BNPL providers share data with credit bureaus and some lenders may not adopt the new models immediately, suggesting a slow rollout of this change.
Source: https://kutv.com/news/eye-on-your-money/buy-now-pay-later-will-soon-impact-your-credit-score