Buy Now Pay Later Joins Credit Scores Without the Consumer Protections

What Happened

Starting later this year, Buy Now, Pay Later (BNPL) services such as Klarna, Afterpay, and Affirm will officially be included in consumer credit scores. FICO – the company behind one of the most widely used credit scoring models – has announced two new versions of its score. These are called FICO 10 BNPL and FICO 10T BNPL. They incorporate BNPL payment history.

BNPL purchases operated in a gray area for years. They allowed consumers to split purchases into installments without most of the oversight applied to traditional credit. Missed BNPL payments often flew under the radar, and responsible use did little to build a formal credit history. But that’s about to change.

This change reflects the rapid growth of BNPL as a preferred payment method, particularly among younger consumers. According to industry data, nearly 25% of Americans have used BNPL in the past year, with Gen Z and Millennials driving the trend.

But as these services become more entrenched in daily spending, credit bureaus and lenders are looking for ways to assess the financial habits tied to them. FICO’s update signals a major step in formalizing BNPL’s place in the broader credit system.

Why It Matters

On the surface, adding BNPL data to credit reports might sound like a positive development since timely payments could help consumers build their credit. But there’s a deeper, more complicated reality that deserves attention.

BNPL is being treated like a credit card in terms of how it affects your credit score. However, it lacks the protections, oversight, and transparency that traditional credit products are required to provide.

Unlike credit cards, which are governed by regulations like the Truth in Lending Act and the CARD Act, BNPL providers operate with far fewer restrictions. That means terms can be unclear, repayment schedules can vary widely, and consumers often lack the same recourse if something goes wrong.

But now any missed BNPL payments will now hurt your credit in the same way a missed credit card payment would. But unlike credit cards, they don’t offer the same safeguards that help consumers avoid getting trapped in debt.

There’s also concern that BNPL, marketed as a low-risk, easy way to finance purchases, has encouraged overspending. Studies show that BNPL users are more likely to miss payments compared to credit card holders. That’s in part because repayment schedules can be hard to track and BNPL purchases don’t always feel like real debt.

With those missed payments now impacting credit scores, consumers could be facing heftier and longer-term financial consequences.

How It Affects Readers 

On one hand, incorporating BNPL into credit scores introduces overdue transparency to a fast-growing corner of consumer finance. It ensures that how you manage these payments, whether responsibly or recklessly, affects your creditworthiness.

But on the other hand, it exposes a regulatory gap that deserves the spotlight. BNPL companies have operated in a space with fewer rules, and now they’re influencing credit scores without the same consumer protections that credit card companies must follow.

This raises important questions such as if BNPL should be regulated like traditional lenders are? Are consumers being set up to fail by a system that punishes missed payments but doesn’t ensure fair lending practices?

What is clear is that BNPL is no longer a consequence-free tool for splitting payments. It now carries real credit risks. Responsible consumers who track payments carefully could benefit by building their credit history. But for those who fall behind, often unknowingly, the financial fallout is real. 

As BNPL continues to evolve, so will the debate over how much oversight these companies need to protect consumers and maintain a fair credit system.