Credit Bureaus Adding Buy Now, Pay Later Products to Credit Reports

Consumers Should Be Aware of Impact of New Form of Debt

American Banker reports that the major credit bureaus are adding designations for Buy Now, Pay Later (BNPL) products such as AfterPay and Klarna.

Beginning in the next few weeks, Equifax will add a business industry code for BNPL to classify data such as payment history, a move that will make BNPL loans visible on credit reports. Equifax says this will provide clients and scoring partners the ability to decide how to include BNPL payments into their own decision making for new financial services. At the same time, TransUnion is working on its own BNPL credit reporting service.

The American Banker piece notes:

Experian’s website says BNPL payments can impact a consumer’s credit score, and Affirm reports some BNPL loan data to Experian.

The move to add data on BNPL products to consumer credit files comes as the Consumer Financial Protection Bureau (CFPB) has opened an inquiry into the relatively new short-term loan products.

“Buy now, pay later is the new version of the old layaway plan, but with modern, faster twists where the consumer gets the product immediately but gets the debt immediately too,” said CFPB Director Rohit Chopra. “We have ordered Affirm, Afterpay, Klarna, PayPal, and Zip to submit information so that we can report to the public about industry practices and…