Fact Check: Users with five or more BNPL loans saw stable or increased credit scores.

Fact Check: "Users with five or more BNPL loans saw stable or increased credit scores."

What We Know

Buy Now, Pay Later (BNPL) loans have become increasingly popular, with many consumers utilizing them for various purchases. Historically, most BNPL lenders did not report payment histories to major credit reporting agencies, meaning that timely repayments typically did not positively influence credit scores, while defaults could lead to negative impacts if reported by debt collectors (Consumer Financial Protection Bureau). However, recent developments indicate that BNPL data is starting to be integrated into credit scoring models.

FICO, the company behind the widely used credit score, announced that it will incorporate BNPL data into its scoring system, specifically with the introduction of FICO Score 10 BNPL and FICO Score 10 T BNPL. According to a study conducted by FICO and BNPL provider Affirm, the majority of consumers with five or more BNPL loans experienced either stable or increased credit scores (Axios). Additionally, it was reported that over 85% of participants in a related study saw credit score changes of less than 10 points, with many experiencing no change or an increase in their scores (ThePaypers).

Analysis

The claim that users with five or more BNPL loans saw stable or increased credit scores is supported by recent findings from FICO and Affirm, which indicate that a significant number of consumers in this category did not see a negative impact on their credit scores. The study mentioned in the Axios article suggests that the majority of these users either experienced higher scores or no changes at all (Axios).

However, it is essential to consider the broader context of BNPL usage. While the data suggests that many users are managing their BNPL loans responsibly, there are concerns about the potential for "phantom debt," where users accumulate debt without a clear understanding of their financial obligations. The Federal Reserve reported that nearly one-fourth of BNPL users paid late in 2024, indicating that while many users may see stable or improved scores, a significant portion may struggle with repayments (Axios).

Moreover, the integration of BNPL data into credit scores is still in its early stages, and the long-term effects on credit scores remain uncertain. As new scoring models are developed, the impact of BNPL loans on creditworthiness may evolve, potentially affecting users differently based on their repayment behaviors and overall credit profiles (ABC News).

Conclusion

The claim that users with five or more BNPL loans saw stable or increased credit scores is Partially True. While evidence supports that a majority of users in this category experienced stable or improved credit scores, it is crucial to acknowledge the risks associated with BNPL loans and the fact that not all users manage these loans effectively. The evolving nature of credit scoring models incorporating BNPL data adds another layer of complexity to this issue.

Fact Check: Users with five or more BNPL loans saw stable or increased credit scores.