Millions of Americans are turning to Buy Now, Pay Later (BNPL) services like Klarna, Afterpay, Affirm, and PayPal to cover everyday purchases.
From groceries to gas, shoppers increasingly rely on these short-term installment loans to manage inflation, student loan repayments and rising interest rates. But starting this fall, these financial choices could affect your credit score, for better or worse.
FICO, the company behind one of the most widely used credit scoring models, announced it will incorporate BNPL repayment data into two new credit scores. This change aims to give lenders a more complete picture of a person’s financial habits, including whether they’re keeping up with BNPL payments or falling behind.
“By capturing a broader view of consumer credit behavior, lenders believe they can make more informed decisions, ultimately benefiting both the industry and consumers,” Vice President and General Manager of B2B Scores at FICO, Julie May, said in a release.
What’s Changing?
BNPL services typically allow consumers to break up purchases into several interest-free payments. Unlike credit cards, these platforms have traditionally carried fewer penalties for missed payments and haven’t been factored into traditional credit reports.
“People need to be more mindful about how they use Buy now, pay later loans,” said Angela Brock, a Houston-based Certified Financial Coach and founder of Hello Breakthrough. “If you don’t have a plan to pay them off, they’re just another bill that can sabotage your financial future.”
That’s about to change.
Under FICO’s upcoming models, consumers who consistently make on-time BNPL payments could see their credit scores improve. On the flip side, late payments, defaults or a high volume of BNPL loans taken out quickly could drag scores down.
“Right now, some people use multiple BNPL loans without realizing it could appear risky to lenders, even if they’re making every payment on time,” Brock said. “Opening too many at once might mirror credit card churning behavior and raise red flags.”
BNPL services surged in popularity during the pandemic and have remained popular due to inflation and economic uncertainty. Initially designed for big-ticket items like electronics or furniture, BNPL options are now used by more consumers to pay for essentials like groceries, medical bills and even fast food.
A Lending Tree survey found that 25% of buy now, pay later users are funding grocery purchases with loans, up from 14% in 2024.
“I talk to people all the time who say they use BNPL to buy everyday necessities,” Brock said. “But it’s not just one $19.99 payment, it’s four or five of them stacked together. It adds up fast, and you don’t even realize how deep in you are until payments start bouncing.”
She likens it to a modern version of layaway, except you get the product upfront and risk paying for it indefinitely.
“If you can’t pay it off within 23 days,” she advises, “you probably can’t afford it.”
FICO says it has created a unique scoring approach that accounts for the distinct nature of BNPL borrowing, which typically doesn’t involve revolving credit or traditional debt structures. However, it may take time before lenders fully adopt these new models. Experts estimate it could be several years before widespread implementation.
Still, consumers should begin preparing now.
What you can do
With these changes on the horizon, financial advisors recommend the following steps for BNPL users:
- Track your BNPL usage. Don’t overextend yourself by juggling multiple loans from different platforms.
- Make payments on time. Late payments could now harm your credit profile.
- Treat BNPL like any other form of credit. While convenient, these loans are still debts and will now be part of your credit identity.
