In an era defined by digital innovation and evolving consumer expectations, short-term financing where consumers split purchases has skyrocketed. Buy Now, Pay Later (BNPL) platforms promise flexibility and convenience, but they also raise critical questions about credit reporting and consumer health. As we transition into 2025, more than 90 million Americans are expected to embrace these services, prompting a closer look at how BNPL activity intersects with traditional credit files.

This comprehensive exploration sheds light on historical practices, recent shifts driven by major credit scoring models, and the tangible impacts on everyday borrowers. Whether you’re a consumer, lender, or industry observer, understanding these developments is crucial to navigating the modern credit landscape.

Understanding Buy Now, Pay Later

Buy Now, Pay Later refers to interest-free installment plans that allow consumers to break down expenses into manageable payments—often four installments over six weeks. These plans typically involve minimal or no credit checks, inviting shoppers who might otherwise shy away from traditional credit cards. Retailers benefit from higher average order values, while BNPL providers earn merchant fees. Yet beneath the surface, the absence of rigorous underwriting and widespread reporting has sparked both enthusiasm and concern.

In 2023, 21.2% of consumers with credit files used BNPL at least once, up from 17.6% in 2021. While these figures underscore rapid adoption, they also highlight a growing cohort of borrowers accumulating short-term obligations that may not be visible to credit bureaus—until now.

Historical Reporting Practices

Traditionally, most BNPL providers did not relay installment data to the major credit bureaus. Consequently, payment history on BNPL loans had no bearing on FICO scores unless accounts fell into collections. This opacity fueled fears of “phantom debt” masking overextension until defaults emerged.

New FICO Scoring Models

In June 2025, FICO unveiled two new models—FICO Score 10 BNPL and FICO Score 10 T BNPL—that integrate BNPL repayment data into traditional credit assessments. Developed in partnership with Affirm and based on data from over 500,000 users, these models offer a comprehensive view of repayment behavior rather than ignoring short-term loans.

• BNPL accounts are grouped to prevent penalizing borrowers for multiple small loans.
• On-time payments can bolster credit scores, while missed installments, once invisible, will now register as derogatory events.
• Lenders can opt in to these new scores, gradually broadening market uptake.

Early trials revealed that consumers with five or more Affirm loans saw stable or improved scores when they maintained consistent payments. This data-driven approach aligns credit file visibility with actual risk, benefiting disciplined borrowers and informing lenders more accurately.

Consumer Benefits and Risks

The incorporation of BNPL data into credit files presents a double-edged sword. On one hand, responsible borrowers gain an opportunity to build or maintain credit health by honoring installments. On the other, late or missed payments—reported for the first time—can swiftly damage credit standings.

• Potential Benefits:
  • Opportunities to establish credit history for underbanked consumers.
  • Recognition of consistent, timely payments improves FICO scores.
• Potential Risks:
  • Overextension and possible financial distress if multiple BNPL loans accumulate without adequate reporting.
  • Sudden score drops for consumers unaware that BNPL activity would factor into their credit profile.

Regulatory and Industry Perspectives

Regulators and consumer advocates have sounded alarms over the rapid expansion of BNPL without sufficient oversight. The Consumer Financial Protection Bureau has noted that most BNPL loans have remained off credit files, increasing the risk of undisclosed debt burdens. Late payment rates climbed to 25% in 2024, signaling potential distress among users.

Industry stakeholders, including major credit bureaus and additional BNPL providers, are evaluating pilot programs similar to Affirm’s data-sharing efforts. If adopted broadly, these practices could standardize reporting but require robust consumer education to mitigate unintended harm.

Future Outlook for the Credit Ecosystem

As BNPL evolves from a peripheral payment option to an integral element of credit reporting, the ecosystem stands at a crossroads. Lenders armed with richer data can refine risk assessment, while borrowers gain new avenues to build credit—provided they manage installments responsibly.

The road ahead will likely feature:

• Expanded adoption of BNPL-inclusive scoring by lenders and bureaus.
• Enhanced regulatory guidelines to ensure transparent consumer disclosures.
• Advanced analytics to distinguish between healthy and precarious borrowing patterns.

Ultimately, the shift toward transparency—and the integration of BNPL activity into credit files—promises a more equitable and accurate credit system. By recognizing everyday installment behavior, this new approach aligns credit outcomes more closely with real-world financial responsibility, offering a balanced framework for growth, risk mitigation, and consumer empowerment.