BNPL activity still doesn’t affect consumer credit scores.
Why it matters: As the BNPL industry has grown, so has the need to make borrowing activity more transparent.
What’s happening: Over the past six months, the top three U.S. credit bureaus — Equifax, TransUnion, and Experian — have all begun working with BNPL firms.
- Despite those efforts, the industry still can’t agree on a standard reporting structure for the most common form of short-term installment loan.
- As a result, many BNPL providers remain picky about what they are willing to share with the bureaus.
Where it stands: Klarna doesn’t report any account information or repayment histories to any of the U.S. credit bureaus today — though it began sharing that info with U.K. credit bureaus last month.
- Affirm has been working with some credit bureaus to report longer-term, monthly installment loans for big-ticket items but has shied away from sharing data on short-term, “pay-in-four” installment loans.
Between the lines: BNPL borrowers who make on-time payments are not benefiting as they would from paying off credit cards or other loans.
- Including BNPL data would increase most consumer credit scores, credit bureaus say.
- That’s particularly true for so-called “thin file” borrowers, those with a limited amount of credit data.
The bottom line: It’s unlikely that BNPL activity will make it into FICO or VantageScore models anytime soon.