FICO to add Buy Now, Pay Later data to credit scores

Fair Isaac Corp. (FICO) will incorporate Buy Now, Pay Later (BNPL) data into two of its credit scores set to launch in Fall 2025. The company, which owns the rights to the market’s most widely adopted consumer credit risk assessment methodology, announced the move on Monday.

The change will provide mortgage brokers, loan officers and lenders with visibility into what has often been called “phantom debt” — installment loans that previously did not appear on borrowers’ credit reports. BNPL is a type of short-term financing that gained popularity during the COVID-19 pandemic, particularly among younger and underserved consumers shopping online.

The new scores, FICO Score 10 BNPL and FICO Score 10 T BNPL, will integrate BNPL installment loan data alongside traditional credit report information by aggregating multiple BNPL loans when calculating certain in-model variables.

According to FICO, the updated methodology captures additional predictive signals from BNPL data while boosting credit scores for some consumers. The company will offer the new versions alongside its current scores at no additional cost to ensure a smooth transition and added value for lenders.

BNPL products “are playing an increasingly important role in consumers’ financial lives,” according to Julie May, vice president and general manager of B2B scores at FICO. “We’re enabling lenders to more accurately evaluate credit readiness, especially for consumers whose first credit experience is through BNPL products.” 

In the mortgage space, loan officers and lenders have expressed concern about the lack of transparency and guidance around BNPL loans, though most do not view them as a systemic risk. Industry experts note that approaches to BNPL vary depending on secondary market investors, with many calling for greater clarity and consistency.

“Our clients tell us that FICO’s initiative to include BNPL data in credit scoring is a progressive step that acknowledges the evolving landscape of consumer financing,” May said. “By capturing a broader view of consumer credit behavior, lenders believe they can make more informed decisions, ultimately benefiting both the industry and consumers.”