FICO scores to Include BNPL starting fall of 2025 

The inclusion of Buy Now, Pay Later (BNPL) loans in FICO scores marks a significant shift in how creditworthiness is measured. This development affects consumers, lenders, and the broader financial system, bringing new opportunities and notable risks. 

What’s Changing in Credit Scoring 

FICO is set to launch new models in fall 2025 – FICO Score 10 BNPL and FICO Score 10 T BNPL—that will incorporate BNPL data into credit scores. This evolution means that short-term installment loans (popular with BNPL services like Affirm, Klarna, and Afterpay) will become visible on consumer credit reports, giving lenders a more complete snapshot of a borrower’s debt and payment behavior. 

The Pros of Including BNPL in FICO Scores 

• Improved Financial Inclusion: Responsible use of BNPL, with timely payments, may raise credit scores, especially for consumers with limited credit histories who previously found it difficult to build credit through traditional means. 

• Fairer Risk Assessment: Including BNPL payments creates a more accurate profile of actual consumer debts, reducing “phantom debt” that lenders currently cannot see and preventing overextension due to incomplete data. 

• Incentive for Good Behavior: Consumers are motivated to make BNPL payments promptly, understanding that positive payment history will now help their credit scores. 

The Cons and Cautions 

• Potential for Credit Damage: Missed or late BNPL payments can now lower scores, creating new risks for users accustomed to flexible payments and for those with less financial literacy. 

• Short-Term Loan Dynamics: The short payback period of most BNPL loans means multiple account openings can temporarily lower a score due to a “new credit” penalty, even for responsible users. 

• Inconsistent Reporting: Not all BNPL providers report data the same way or to all bureaus. Some, like Klarna, are withholding data over concerns about undue negative impact, which could create confusion or inconsistency in scores. 

• Vulnerability for Cash-Strapped Users: Lower-income or younger individuals have greater exposure to cash flow issues from using BNPL, amplifying the risk that credit scores become volatile and harder to manage. 

Advisor Takeaways 

In sum, the FICO scoring update better reflects modern credit use, but requires a more careful, educated approach for consumers -especially those exploring BNPL as a credit-building tool. While responsible use becomes an opportunity to build credit and improve financial access, the inclusion also introduces new hazards for those who may not manage payments reliably or who over-leverage due to the ease and prevalence of these loans. We encourage clients to track their installment loans, maintain timely payments, and treat BNPL as seriously as any other form of consumer debt. 

Emerald Advisors, LLC is a registered investment adviser.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies.  Investments involve risk and, unless otherwise stated, are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.