- FICO announced a new model that will factor Buy Now, Pay Later (BNPL) loans into consumer credit scores, marking a significant shift in creditworthiness assessment.
- The new scores, available to lenders from autumn, aim to provide increased visibility into consumers' repayment behavior and responsibly expand credit access, especially for those with limited credit histories.
- A joint study with Affirm indicated that consistent on-time BNPL repayments could lead to improved credit scores, potentially enhancing access to traditional loans and rentals.
- Consumer advocates raised concerns about 'loan stacking' and 'phantom debt,' warning that integrating BNPL into scores could have unforeseen negative effects on 'credit vulnerable' communities.
- While not expected to be an immediate 'game-changer' for consumers with established credit profiles, the change could create a more accurate picture of consumer debt, potentially preventing over-extension.
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