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U.S. banks are cautious about consumers heavily using Buy Now, Pay Later (BNPL) products. They suggest that this could be viewed as risky behavior, potentially affecting creditworthiness assessments for traditional financial products like mortgages or credit cards. FICO, on the other hand, believes BNPL could help credit scores.
Lenders are more wary. One credit union calls up customers who use BNPL and warns against it. A community bank scrutinizes loan applications more closely when it notices them in its underwriting. JPMorgan Chase and Capital One have barred customers from using credit cards to pay down the installment loans. FICO’s new model will shed light on what has become a multibillion-dollar blind spot in the credit-reporting system. Because BNPL loans haven’t widely been reported to credit bureaus, traditional lenders have been limited in measuring the risks associated with their growing popularity.
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