Credit Bureaus Looking to Add BNPL Histories to Credit Scores

As Buy Now, Pay Later becomes a more popular topic, especially among regulators, another key group in the financial services is looking at measuring the impact of those who take out this new form of credit — credit bureaus. Now that they are becoming more popular and mainstream, the credit bureaus are looking at factoring consumers’ payment histories on Buy Now, Pay Later loans into their credit scores, according to a published report.

Equifax plans on adding data about Buy Now, Pay Later loans into consumers’ credit histories next month. TransUnion said it is “well on” the way to doing so, and Experian is already including some data in credit reports as it works to expand and add more, according to the report.

About half of Americans have used some form of this type of credit, according to a survey that was conducted last August by CreditKarma. About one-third of those who have taken out these types of loans have missed at least one payment.

Adding this type of data to consumers’ credit histories is a double-edged sword, according to the report. Given that Buy Now, Pay Later is most popular among younger consumers, furnishing information about their payments to the credit bureaus could help boost their credit scores. People who did not have enough of a credit history to qualify for a traditional loan had their credit scores boosted by 21 points when factoring in Buy Now, Pay Later payments, according to data from Equifax.

But the downside is that missed payments will hurt credit scores. The newness of this type of credit is keeping consumer advocates and industry representatives on the fence about the ultimate impact that will be felt from incorporating it into consumers’ credit files.

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