Fact Check: Average BNPL loan is just $135, unlikely to significantly change credit scores.

Fact Check: "Average BNPL loan is just $135, unlikely to significantly change credit scores."

What We Know

The claim states that the average Buy Now, Pay Later (BNPL) loan is $135 and that such small loans are unlikely to significantly affect credit scores. According to a report from Capital One Shopping, the average BNPL loan amount is indeed $135, typically repaid over a six-week period. This is significantly lower than traditional installment loans, which average around $800 over a longer duration of 8 to 9 months. Furthermore, a report by Fortune supports the assertion that repaying small loans like these may not lead to substantial changes in credit scores, as consistent repayment of small amounts might not "move the needle" significantly.

Analysis

The evidence presented in the sources indicates that the average BNPL loan is indeed $135, corroborating the claim. The comparison with traditional loans highlights the relatively small financial impact of BNPL loans. The Consumer Financial Protection Bureau also notes that consumers using BNPL often have similar credit profiles to those using credit cards, which suggests that the impact on credit scores may be minimal, especially if payments are made on time.

However, it is important to consider the context of credit scoring. While small loans may not significantly impact scores, factors such as payment history and credit utilization are critical components of credit scoring models. As noted in the MyShortlister article, failing to make timely payments can negatively affect credit scores, indicating that while the average loan size is small, the behavior surrounding repayment is crucial.

The reliability of the sources used is generally high, with reports from established financial institutions and reputable media outlets. However, the interpretation of how BNPL loans affect credit scores can vary based on individual circumstances and the specific credit scoring model used.

Conclusion

Needs Research. While the claim that the average BNPL loan is $135 is supported by multiple sources, the assertion that such loans are unlikely to significantly change credit scores requires further investigation. The impact of BNPL loans on credit scores can depend on various factors, including individual repayment behavior and the specific credit scoring model applied. More comprehensive studies are needed to fully understand the implications of BNPL loans on credit scores.

Fact Check: Average BNPL loan is just $135, unlikely to significantly change credit scores.