FICO’s New BNPL-Integrated Credit Scores Signal Major Shift for Credit Card Issuers

Data analytics provider FICO has announced the launch of new credit scores that include buy now, pay later (BNPL) information. The new credit scores stand to empower credit card issuers to gain a more robust view of the credit profiles of prospective customers and avoid exposure to unnecessary risk. 

The new scores, known as FICO Score 10 BNPL and FICO Score 10 T BNPL, may also open the doors to further financial inclusion. FICO is the first leading score provider to integrate BNPL data into credit scores, according to the company’s release.

Buy now, pay later payments are expected to explode in popularity in coming years. In 2023, the global BNPL market had a value of $30.3 billion, which is forecast to swell to more than $167 billion by 2032, according a recent report.

Julie May, FICO’s Vice President and General Manager of B2B Scores, noted in the release that “buy now, pay later loans are playing an increasingly important role in consumers’ financial lives.”

And BNPL isn’t just popular with a particular segment of shoppers. A Newsweek study reveals that “over half (52%) of all Americans now use BNPL, with those in the Gen Z and Millennial age brackets leading the way at 59 percent and 58 percent, respectively.”

With more Americans turning to BNPL, the ability to determine whether prospective customers are using the payment tool is crucial to lenders. FICO’s innovative shift to integrate BNPL data into its new credit scores serves to fill in the gaps that other credit scores may have.

Incorporating BNPL information into credit scores positions lenders to arrive at a more accurate assessment of consumer creditworthiness. Some borrowers, especially those who are trying to repair their credit, may choose to make use of BNPL payments as a first step toward mending their financial future. 

Members of Generation Z and millennials use BNPL tools more than other generations.

FICO’s May said she believes that including BNPL data in scores will help lenders evaluate credit readiness for consumers whose use of BNPL is their first experience with a credit tool. She said including BNPL data in the company’s new credit scores supports FICO’s “mission to expand financial inclusion by helping more consumers gain access to credit.”

FICO consulted with leaders in the U.S. lending space as it considered updating its credit scores to incorporate BNPL information. Those conversations revealed a shared sentiment in the industry that enhancing credit scores to include BNPL data was a vital advancement.

“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.”