FICO Study Highlights Impact of BNPL on Credit Scores

Author

Slice of Finance Team
06 Feb

Key Highlights:

  • BNPL data inclusion can improve FICO® Scores for some consumers.

  • FICO's proprietary treatment enhances credit score predictiveness and risk assessment.

  • 85% of consumers in the study saw score changes within +/-10 points.

  • Higher or unchanged scores for most borrowers with five or more BNPL loans.

  • FICO is developing a solution to integrate BNPL data into credit evaluations.

Source: Business Wire

Notable Quotes:

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“Our findings show that the inclusion of BNPL data via our innovative treatment can drive score increases for some consumers, while improving model risk performance for lenders.”

Ethan Dornhelm, VP of Scores and Predictive Analytics at FICO
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“Through studies like this, we aim to drive greater transparency and promote industry best practices for responsible reporting of BNPL data to credit bureaus.”

Don Lemire, VP of Credit Analytics at Affirm
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“We are eager to arm lenders with a tool that allows them to incorporate BNPL data into their credit evaluation process.”

Julie May, VP & General Manager of Scores at FICO

Why This Matters:

The growing adoption of BNPL loans presents new challenges and opportunities for credit scoring. FICO’s study with Affirm demonstrates how incorporating BNPL data into credit models can enhance score accuracy and maintain responsible lending practices. As BNPL continues to shape consumer finance, FICO’s innovative approach aims to ensure fair credit assessment while promoting financial inclusivity.