Fico has announced plans to include buy now, pay later (BNPL) data in its credit scores after completing a year-long study with Affirm. The move comes as BNPL loans gain popularity, raising concerns about consumer debt and their impact on creditworthiness.
The study analyzed the credit scores of over 500,000 consumers with at least one Affirm BNPL loan, comparing them to a benchmark group without such loans. Fico simulated the inclusion of BNPL data in credit reports, finding that over 85% of consumers experienced minimal score changes—within +/- 10 points. Notably, consumers with five or more BNPL loans saw higher or unchanged scores, with no adverse impact on Fico Score predictiveness.
Ethan Dornhelm, Fico’s VP of Scores and Predictive Analytics, stated, “Our findings show that including BNPL data can drive score increases for some consumers while improving risk assessment for lenders.”
Fico is now developing a proprietary method to integrate BNPL data into credit scores, aiming to provide lenders with a more comprehensive tool for credit evaluation. Julie May, VP and GM of Scores at Fico, emphasized the company’s commitment to innovation and inclusivity in lending.
This development marks a significant step in adapting credit scoring models to reflect evolving consumer financial behaviors.