Buy Now, Pay Later Just Got Personal: How FICO's New Credit Score Model Now Considers Your Installment Loans

Your buy now, pay later purchases are about to matter when lenders check your creditworthiness. Fair Isaac Corp., the organization behind the industry-standard FICO credit score, rolled out a significant update this week: two fresh scoring models specifically designed to evaluate buy now, pay later accounts alongside traditional lending behavior. These new iterations—FICO Score 10 BNPL and FICO Score 10 T BNPL—will be available to lenders at no additional charge, representing a watershed moment in how modern consumer spending gets measured.

The new models won’t immediately show up on your credit report, though. The timeline depends on when the three major credit bureaus—Experian, Equifax, and TransUnion—choose to integrate this information into their systems. That decision remains in their hands, meaning the rollout could vary by institution.

The Technology Behind the Change: Why BNPL Data Now Matters

What makes this update noteworthy is how extensively FICO tested the new methodology. The company trained its algorithm on data from more than half a million BNPL users, partnering with Affirm to build a representative dataset. The approach reflects a fundamental shift: rather than treating each installment loan as a separate credit inquiry that damages your score, FICO now bundles multiple BNPL purchases together.

This distinction matters significantly. Someone who takes out five Affirm loans in quick succession won’t face the same score penalty that traditional credit models would impose for opening five new credit lines. In fact, early testing demonstrated that borrowers with multiple BNPL accounts often saw their scores either improve or remain stable—provided they paid bills on schedule.

The underlying reason for this redesign is straightforward: credit bureaus and lenders realized they were working with incomplete financial information. A customer might be juggling numerous BNPL loans that never appeared on traditional credit reports, creating a blind spot in their lending assessments. According to TransUnion, approximately 130 million Americans now have buy now, pay later history within the past twelve months alone. Affirm recently began sending comprehensive data on its lending products, including the popular “Pay in 4” option, to Experian—a move the bureau framed as promoting transparency in an industry that has operated largely outside conventional credit tracking.

The Market’s Explosive Evolution: BNPL From Niche to Mainstream

The buy now, pay later sector exploded starting in 2019, then entrenched itself during the pandemic years. Platforms like Affirm, Klarna, and PayPal transformed consumer spending by allowing shoppers to divide purchases into installment payments directly at checkout—frequently with zero interest. The model proved incredibly popular because it offered instant approval, zero penalty fees for late payment, and interest rates significantly lower than credit cards. For companies offering these services, the revenue came partly from charging retailers a commission to feature installment options at checkout, plus potential interest charged to consumers.

The widespread adoption reflected genuine consumer demand for payment flexibility. Yet this same rapid growth created complications for traditional lenders who suddenly couldn’t see the full picture of a customer’s financial obligations—a critical gap FICO’s new model aims to close.

The Reality Check: Who Actually Uses BNPL and What It Reveals

Here’s where the story becomes more complicated. Federal research from the Consumer Financial Protection Bureau uncovered a striking pattern: the typical buy now, pay later customer already struggled with credit. Most BNPL users fall into “subprime” or “deep subprime” categories—meaning their credit scores range between 300 and 619. These individuals typically don’t qualify for conventional personal loans. The CFPB’s investigation found that average BNPL borrowers took out more than nine loans annually, with roughly 63% carrying multiple active loans simultaneously. The typical transaction size hovers around $140.

This revelation complicates the credit bureaus’ narrative about expanding credit-building opportunities. While bureaus champion these changes as helping “credit invisible” Americans—the estimated 25 million people with zero credit history—the data suggests something different: only about 4% of BNPL users actually fall into that category. The overwhelming majority already possess credit files. Instead, what’s happening is that financially vulnerable populations are taking on increasing amounts of installment debt.

The Consumer Protection Gap Nobody’s Talking About

Consumer advocates raise legitimate concerns about how incorporating BNPL data will ultimately serve borrowers. Chi Chi Wu, an attorney with the National Consumer Law Center, points out that credit bureaus have financial incentive to accumulate more data—and that incentive isn’t necessarily aligned with consumer interests. “Their business model depends on data,” she explains. “The more information they compile, the better their position.”

She also highlights a practical protection gap. When you dispute an unauthorized credit card charge, federal law protects you. Buy now, pay later transactions offer no equivalent safeguard. Additionally, Wu recommends that consumers compare payment methods carefully: a credit card often provides superior legal protections compared to BNPL options, even though both allow installment spending.

The bigger picture that emerges from these policy changes—and Wu’s assessment—reveals who truly benefits from integrating BNPL loans into credit scoring systems: the credit bureaus themselves gain tremendous new data and relevance, even as the actual impact on vulnerable borrowers remains uncertain.