FICO to Include Buy Now, Pay Later Loans in Credit Score Calculations Starting Fall 2025
In a significant shift for consumer credit reporting, FICO, the company behind the widely used FICO Score, has announced that it will begin factoring Buy Now, Pay Later (BNPL) loans into Americans’ credit scores starting in Fall 2025. This change is poised to reshape how millions of consumers’ financial habits are evaluated, as BNPL services like Affirm, Klarna, and Afterpay have surged in popularity, particularly among younger shoppers seeking flexible payment options for online and in-store purchases.
What Are Buy Now, Pay Later Loans?
Buy Now, Pay Later is a financing option that allows consumers to purchase goods or services and pay for them in installments, typically over a short period, such as four payments spread across six weeks. Unlike traditional credit cards, BNPL plans often come with low or no interest for those who pay on time, making them an attractive alternative for budget-conscious shoppers. However, missed payments can lead to late fees, and in some cases, high interest rates for longer-term BNPL plans.
The rise of BNPL has been meteoric, with millions of Americans using these services for everything from clothing to electronics. According to industry reports, BNPL transactions in the U.S. reached over $100 billion in 2024, reflecting their growing role in consumer spending. Until now, most BNPL loans have not been reported to credit bureaus, meaning they’ve had little to no direct impact on credit scores. FICO’s new policy aims to change that.
Why Is FICO Making This Change?
FICO’s decision to include BNPL loans in credit score calculations stems from the need to create a more comprehensive picture of consumer financial behavior. As BNPL usage has grown, lenders and credit bureaus have recognized that these loans represent a form of debt that should be factored into creditworthiness assessments. By incorporating BNPL data, FICO aims to provide lenders with better insights into borrowers’ ability to manage multiple types of credit.
“Buy Now, Pay Later has become a mainstream financial tool, and its inclusion in credit scoring ensures we’re capturing a fuller view of a consumer’s financial responsibilities,” a FICO spokesperson said. “This change aligns with our commitment to fair and accurate credit assessments.”
The move also follows efforts by major credit bureaus—Experian, Equifax, and TransUnion—to standardize how BNPL data is reported. In recent years, some BNPL providers have begun voluntarily sharing payment data with bureaus, but reporting has been inconsistent. FICO’s updated scoring model will rely on lenders and BNPL providers to supply accurate data to credit bureaus, which will then be used to calculate scores.
How Will This Affect Consumers?
The inclusion of BNPL loans in FICO scores could have varied effects on consumers, depending on their financial habits:
- Positive Impact for Responsible Users: Consumers who use BNPL services and make payments on time could see a boost to their credit scores. Timely payments demonstrate creditworthiness, similar to paying off a credit card or traditional loan. For those with thin credit files—such as young adults or those with limited credit history—BNPL reporting could help build a stronger credit profile.
- Negative Impact for Missed Payments or High Debt: On the other hand, missed BNPL payments or accumulating multiple BNPL loans could lower credit scores. Late payments, defaults, or high debt-to-income ratios may signal financial strain to lenders, potentially leading to lower scores and reduced access to other forms of credit, like mortgages or auto loans.
- Varying Effects Based on Usage: The impact will also depend on how frequently consumers use BNPL services and the size of their loans. For example, someone who uses BNPL sporadically for small purchases and pays on time is less likely to see a significant score change compared to someone juggling multiple BNPL plans with large balances.
What Should Consumers Do?
To prepare for this change, consumers can take several steps to ensure their BNPL usage doesn’t harm their credit scores:
- Pay on Time: Treat BNPL payments like any other financial obligation. Set reminders or enable autopay to avoid missing due dates, as late payments could negatively affect your score.
- Monitor BNPL Usage: Keep track of how many BNPL plans you have active at once. Taking on too many loans could increase your debt load, which may lower your score if it appears you’re overextended.
- Check Your Credit Report: Regularly review your credit reports from Experian, Equifax, and TransUnion to ensure BNPL data is being reported accurately. You can access free weekly reports at AnnualCreditReport.com.
- Understand Your BNPL Terms: Not all BNPL plans are created equal. Some offer zero-interest options, while others may charge high interest rates for extended repayment plans. Read the fine print to avoid surprises.
- Build a Strong Credit Profile: Continue practicing good credit habits, such as paying credit card balances in full, keeping credit utilization low, and avoiding unnecessary debt. These factors will remain critical to maintaining a healthy FICO score.
Industry and Consumer Reactions
The announcement has sparked mixed reactions. Consumer advocates argue that including BNPL loans in credit scores could help responsible users build credit, especially those underserved by traditional banking systems. However, some worry that consumers who rely heavily on BNPL without understanding the risks could face unexpected credit score drops.
Lenders and BNPL providers have largely welcomed the change, as it could lead to more accurate risk assessments. “This is a step toward greater transparency in the credit ecosystem,” said a representative from a major BNPL provider. “We’re committed to working with credit bureaus to ensure our customers’ payment data is reported fairly.”
Looking Ahead
As Fall 2025 approaches, consumers should stay informed about how BNPL reporting will work in practice. FICO has indicated that the transition will be gradual, with BNPL data being phased into credit reports as providers and bureaus align their systems. The exact weight of BNPL loans in FICO’s scoring model remains unclear, but it will likely depend on factors like payment history, debt levels, and the overall mix of credit in a consumer’s profile.
For those who use BNPL responsibly, this change could be an opportunity to strengthen their credit scores. However, it also serves as a reminder that BNPL is not “free money” but a form of credit that carries real financial consequences. Consumers are encouraged to visit FICO’s website (www.myfico.com) or the credit bureaus’ sites (Experian, Equifax, TransUnion) for updates on how BNPL reporting will be implemented.
In a world where financial tools are evolving rapidly, FICO’s decision underscores the importance of staying proactive about credit health. Whether you’re a frequent BNPL user or considering trying it for the first time, understanding its impact on your credit score will be key to navigating the financial landscape in 2025 and beyond.
