by Alice Ibarra in Finance

The use of Buy Now, Pay Later (BNPL) loans is becoming increasingly popular, and soon, how well you manage them could significantly affect your credit score. FICO plans to integrate BNPL data into its FICO Score 10 and FICO Score 10 T models later this year, giving lenders a clearer picture of consumers' repayment behavior. While this could help some build credit, it could also negatively impact those who overspend or misuse BNPL services. Concerns exist about the lack of regulation and the potential for overspending, particularly with the rise of "phantom debt." FICO's new approach aims to address this by aggregating BNPL data to avoid over-penalizing consumers with multiple accounts. However, the rollout might be slow due to the complexity of the credit industry and the varied adoption of different FICO scoring models. The integration of BNPL data represents a step towards a more comprehensive and accurate representation of consumer credit activity, but the full impact remains to be seen.