Fact Check: "FICO's new model will impact millions of Americans' credit scores."
What We Know
FICO, the company responsible for the credit scores used by approximately 90% of U.S. lenders, announced that it will begin incorporating "buy now, pay later" (BNPL) loan history into its credit scoring models starting in the fall of 2025. This decision comes in response to the significant rise in the use of BNPL loans, which saw Americans spending over $116 billion on such loans in 2023, a dramatic increase from just $2 billion in 2019 (New York Times, CNN).
The new FICO scoring models aim to provide lenders with a more comprehensive view of consumers' repayment behaviors, particularly for those who may not have traditional credit histories. This change is expected to affect hundreds of millions of Americans who utilize BNPL loans for various purchases, including clothing, furniture, and groceries (Washington Post, Axios).
Analysis
The claim that FICO's new model will impact millions of Americans' credit scores is supported by multiple credible sources. FICO's decision to include BNPL data is a significant shift in how creditworthiness is assessed, especially given the rapid growth of these loans. Julie May, a vice president at FICO, noted that this inclusion aims to help lenders better evaluate credit readiness, particularly for consumers who may not engage with traditional credit products (New York Times, Fortune).
However, there are caveats to this rollout. Not all BNPL companies report their data to credit bureaus, and not all lenders may choose to adopt the new FICO scoring models. This could lead to a gradual implementation over time, as noted by industry experts (Washington Post, CNN). Despite these uncertainties, the potential for millions of Americans to see changes in their credit scores is significant, especially for those who responsibly manage their BNPL loans.
Conclusion
The verdict on the claim that "FICO's new model will impact millions of Americans' credit scores" is True. The evidence indicates that FICO's decision to incorporate BNPL loan history into its scoring models will indeed affect the credit scores of a substantial number of Americans, particularly those who utilize these loans. While the implementation may take time and not all lenders may adopt the new models immediately, the potential impact on consumers' credit scores is clear.
Sources
- FICO to Include 'Buy Now, Pay Later' Loan History in Credit Scores
- Buy Now, Pay Later loans will soon affect some credit scores
- Buy Now, Pay Later loans will factor in to Americans' credit scores ...
- Gen Z's beloved Buy Now, Pay Later will soon impact credit scores ...
- FICO credit scores to include buy-now-pay-later loans
- FICO Unveils Groundbreaking Credit Scores That Incorporate Buy Now, Pay ...
