Buy Now, Pay Later Loans Will Soon Impact Your Credit Score

FICO's New Credit Scoring Policy

• 🎯 FICO has announced a significant change: ‘Buy Now, Pay Later’ (BNPL) loans will soon be factored into credit scores.
• 🗓️ This change is expected to take effect in the fall.

Reasons for Past Exclusion

• 💡 Historically, BNPL loans were excluded because the industry was not mainstream, lacked industry standards, and sufficient data was unavailable.
• 📈 Companies may have also had less incentive to include them to encourage market growth among individuals with weaker credit scores.

Consumer Actions to Boost Credit

• ✅ The best strategy is to make all payments on time, as structured with BNPL services (e.g., four equal payments).
• 🔍 Consumers should also pay close attention to their credit reports to ensure accuracy and address any errors.

Impact on Consumers

• ⚠️ This change serves as a warning sign that responsible financial behavior is necessary, as BNPL loans must be taken seriously.
• 💰 Conversely, it's a positive development for individuals who haven't established credit, as responsible BNPL use can now help improve their overall creditworthiness.
• 🎓 There's a suggestion that financial literacy regarding credit scores should be taught to younger generations in high school.