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

Buy now, pay later deals have become a familiar part of online shopping—offering instant purchases with small, no-interest installment payments. But until now, these popular short-term loans haven’t shown up on your credit report. That’s about to change.

FICO, the company behind the most widely used credit score in the U.S., has announced it will now begin factoring Buy Now, Pay Later (BNPL) loans into a new version of its credit scoring model. That means these small retail loans will soon help—or hurt—your credit score, depending on how you use them.

BNPL services became widely used around 2019, when retailers began partnering with companies like Affirm, Klarna, and Afterpay to offer installment payment options at checkout. The loans are typically short-term, no-interest, and average just $140, according to Money.com. For consumers, they offer a way to split up payments for clothes, electronics, or household goods without a credit card.

But despite their rapid rise in popularity, BNPL loans have not been reported to the credit bureaus—meaning lenders had no way of seeing them on a credit report. That created blind spots, especially in situations like mortgage applications, where a borrower could have thousands of dollars in active BNPL debt without a lender ever knowing.

That’s changing with the new FICO score.

FICO’s updated scoring model aims to give lenders a more accurate view of a consumer’s overall debt and repayment behavior. This move could bring more transparency to the lending process—and in some cases, help people build or improve their credit.

About 130 million Americans used a BNPL loan in the past year alone, according to Money.com. The Consumer Financial Protection Bureau (CFPB) has noted that many of these borrowers tend to fall into the 300 to 619 credit score range—a group often labeled “subprime.” Many are financially vulnerable and wouldn’t qualify for a personal loan through traditional banks.

Ironically, reporting BNPL loans to credit bureaus could benefit these consumers—if they make their payments on time. For people with no credit history, paying off multiple BNPL loans could start building a positive record. But missed or late payments could hurt scores, just like any other form of debt.

Consumers who regularly use BNPL should start treating these loans like any other credit obligation. Timely payments may help improve credit, but piling up multiple loans at once—or missing payments—could lead to lower scores and fewer borrowing options in the future.

As credit scoring continues to evolve, experts say the best strategy remains the same: borrow responsibly, pay on time, and keep an eye on your credit report.