Fact Check: "Consumers with five or more BNPL loans saw scores increase or remain stable."
What We Know
The claim that consumers with five or more Buy Now, Pay Later (BNPL) loans saw their credit scores increase or remain stable is supported by recent studies and reports. According to a study conducted by FICO in collaboration with BNPL provider Affirm, the majority of consumers who had five or more BNPL loans experienced either an increase in their credit scores or no change at all (Axios). This finding suggests that responsible use of BNPL loans can positively impact credit scores under certain conditions.
However, it is important to note that traditional BNPL loans typically do not report payment history to major credit reporting agencies. This means that while consumers might not see a negative impact on their credit scores from missed payments, they also do not benefit from positive payment history unless the loans are reported (Consumer Financial Protection Bureau). Starting in the fall of 2025, FICO will begin incorporating BNPL data into credit scores, which may change the landscape for how these loans affect creditworthiness (USA Today).
Analysis
The evidence supporting the claim comes from credible sources, including FICO and Affirm, which conducted a study indicating that most consumers with multiple BNPL loans would see stable or improved credit scores. This is a significant finding, as it suggests that the integration of BNPL data into credit scoring models could provide a more comprehensive view of a consumer's financial behavior (Axios, USA Today).
However, the reliability of this claim is contingent on the context of BNPL usage. While the study indicates positive outcomes for many consumers, it does not account for those who may struggle with repayment. Reports indicate that a significant portion of BNPL users have missed payments, which could lead to negative consequences if their loans are sent to collections (Axios). Furthermore, the transition to including BNPL loans in credit scores is still in progress, and the full impact on consumers' credit profiles will not be realized until after the new scoring models are widely adopted (USA Today).
Critics of BNPL loans argue that they can lead to "phantom debt," where consumers take on more debt than they can manage, potentially harming their financial health in the long run (Axios). Thus, while the claim holds true for a majority of responsible users, it does not universally apply to all consumers with multiple BNPL loans.
Conclusion
The verdict on the claim that "consumers with five or more BNPL loans saw scores increase or remain stable" is Partially True. While evidence supports that many consumers may experience stable or improved credit scores with responsible BNPL usage, the broader implications of BNPL loans on credit health and the potential for negative outcomes for some users cannot be overlooked. The evolving nature of credit scoring, particularly with the upcoming integration of BNPL data, adds further complexity to this issue.
