AmiSight 7/30: FICO Is Watching Your BNPL Spending—Are You Ready?
- Ami Kassar
- 1 day ago
- 1 min read
There is mixed reaction about the flurry of buy-now, pay-later installment loans. Banks believe it will hurt consumers’ chances of getting a loan, but FICO says it will raise credit scores.
The point-of-sale loans from companies such as Affirm and Klarna are a popular way to pay for such things like furniture or clothing. The loans give consumers the flexibility of buying the product and then setting up installment payments.
Fair Isaac Corp., the company behind the most widely used U.S. credit score, plans to roll out a new scoring model later this year, factoring in these loans, the Wall Street Journal reports. While FICO maintains that credit scores will improve if consumers keep up with their payments, lenders aren’t so sure.
Bankers and underwriting consultants say frequent use of buy-now, pay-later loans is often seen as risky, even if the consumer is making timely payments. This is because it is hard to tell whether a customer is using the loans responsibly. Lenders such as JPMorgan, Chase, and Capital One have even barred customers from using credit cards to pay down the installment loans.
