Does buy now, pay later affect your credit score?

The company behind the FICO score is going to start including a person's 'buy now, pay later' payment history in its credit models

Miniature shopping cart next to a sign that reads "buy now pay later" on a yellow background
As these loans do not currently show up on credit reports, banks get an 'incomplete picture of how much debt people have'
(Image credit: Nora Carol Photography / Getty Images)

Buy now, pay later (BNPL) loans — the payment plans that allow you to break up a purchase into smaller installments — typically have no bearing on credit score. But that is about to change.

In mid-June, Fair Isaac Corp., the company behind the commonly used FICO score, announced that it "would start including a person's 'buy now, pay later' payment history" in its credit-scoring models, said The New York Times. These loans currently "do not show up on credit reports," which has resulted in banks having an "incomplete picture of how much debt people have, along with their ability to pay it off."

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Becca Stanek, The Week US

Becca Stanek has worked as an editor and writer in the personal finance space since 2017. She previously served as a deputy editor and later a managing editor overseeing investing and savings content at LendingTree and as an editor at the financial startup SmartAsset, where she focused on retirement- and financial-adviser-related content. Before that, Becca was a staff writer at The Week, primarily contributing to Speed Reads.