BNPL remains mainly absent from consumer credit histories


Buy now, pay later loan information still isn’t being widely reported to credit bureaus, more than a year after those firms announced efforts to collect such information.

At issue is the short-term, no-interest installment loan that BNPL providers have popularized with consumers. In recent comments on the task, they said current credit scoring models are incompatible with the new loan type, and credit bureaus attempts to collect that data and incorporate it into consumers’ credit histories have fallen short thus far. 

While BNPL use climbed in recent years, the slow pace of change for credit reporting in this area points to the complexity involved with fitting the burgeoning payment method into the traditional credit scoring framework.

Spokespeople for some of the biggest BNPL providers, Klarna, Afterpay and Zip, said last week their companies are not reporting transaction and account information to national credit bureaus Equifax, Experian and TransUnion.

By contrast, a top executive for a fourth major player, Affirm, asserted last week during a Bank of America Securities payments conference that it’s the only provider sharing positive and negative loan information with credit reporting agencies. Affirm is “leading the charge” on that front, said Rob O’Hare, Affirm’s senior vice president of finance.

Complicating that assertion though is the fact that many of the BNPL providers, including Affirm and PayPal, offer both short-term, interest-free financing, as well as longer-term, interest-bearing loans. Affirm and PayPal still are not reporting their short-term, interest-free loan data yet.

In the smaller tier of BNPL players, Sezzle appears to be the only lender reporting such information. The BNPL provider is sharing that data but only for customers that have opted into Sezzle’s credit building service, a spokesperson said. She declined to say how many have opted in.

Initial efforts

In late 2021 and early 2022, Equifax, Experian and TransUnion each announced they were taking steps to enable BNPL companies to submit short-term loan data, so consumers’ credit histories would be more accurately depicted. 

Those efforts included the creation of a new code identifying short-term, no interest loans and establishing a specific platform where BNPL lenders could input loan information that would be kept separate from “core” credit bureau data due to the unique nature of the BNPL loans.

Not long after, in a June 2022 blog post, the Consumer Financial Protection Bureau said it wanted credit bureaus to take a standardized approach to BNPL and incorporate that data into consumers’ core credit files as soon as possible.   

CFPB Director Rohit Chopra noted the slow pace of credit reporting protocol development when the agency released its report on the subject last September, and said staff would “continue to surface options on how the industry and consumer reporting companies can develop appropriate and accurate credit reporting practices.” 

Since then, little progress appears to have been made. The Consumer Data Industry Association, a trade group representing the credit bureaus, on Friday pointed to the initial changes made by the credit bureaus and said the industry is “highly motivated” to increase visibility of BNPL transactions, but didn’t cite any recent developments.

Although Equifax “encourages” BNPL providers to furnish payment data, short-term, no-interest loans are not broadly reported to that bureau currently, a spokesperson said last week. “Larger dollar and longer term BNPL loans are reported today and appear on consumer credit reports as revolving or installment lines of credit,” the Equifax spokesperson said in an email. 


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