June 24, 2025
Women, Black and Latino shoppers, with low credit scores have been the key to BNPL loan success.
Credit scores could soon reflect how well or poorly American consumers are handling popular Buy Now, Pay Later loans (BNPL), known as a “blind spot” to lenders, CNN reports.
By late 2025, FICO plans to launch credit card suites that include BNPL data in its Score 10 and Score 10 T models so lenders can get an inside look at consumers’ repayment behavior for some of these installment loans, known as an alternative to credit cards. Several American consumers view them as having more flexible payment options or looking to smooth out larger transactions to meet their budgets better.
Experts like Bankrate’s Chief Credit Analyst Ted Rossman say the new development will either be a plus or a loss for consumers dealing with credit issues. But who will be affected the most? Data from the Federal Reserve Bank of Boston and the Consumer Financial Protection Bureau highlight that women, Black and Latino consumers with low credit scores, and those making between $20,001 and $50,000, have been the key to BNPL loan success.
They are more than likely to be BNPL users in addition to younger generational consumers. “A lot of BNPL users are often young people who don’t have long credit histories,” Rossman said. “That’s the more optimistic use case, that these people could be brought into the credit system. And if they use Buy Now, Pay Later responsibly, it should help them.”
Rossman has been keeping up with the issue of BNPL loans, also known as “ghost debt,” with Klarna, Afterpay, and Affirm being the popular ones. As the loans present an opportunity to avoid interest, there was a time when he felt these types of loans present a window to overspend, pay late, and get into trouble — symptoms that can turn into “phantom debt.” In 2024, Rossman said debt creeps up because these companies fail to report outstanding loans to credit bureaus, making it difficult for the lender to know exactly how much debt the customer actually has. “You don’t necessarily need a great credit score to get one of these loans,” the analyst said.
With FICO’s announcement, that will soon change.
During the COVID-19 pandemic, BNPLs were utilized for big-ticket items such as airline tickets or furniture, but now that they have grown increasingly popular, especially for clothing purchases and in light of America’s economic climate, a growing number of consumers have been using the loans to pay for bare necessities such as food.
According to Fox Business, LendingTree data from April 2025 reveals 25% of users have used the service to purchase groceries, a 14% increase from 2024. FICO’s vice president of B2B Scores, Julie May, says the addition represents a “significant advancement in credit scoring, accounting for the growing importance.” “Buy Now, Pay Later loans are playing an increasingly important role in consumers’ financial lives,” May said.
She feels the expansion is “enabling lenders to more accurately evaluate credit readiness, especially for consumers whose first credit experience is through BNPL products.”
RELATED CONTENT: Financing Groceries: More Shoppers Are Buying Now And Paying Later For Food
