Buy Now, Pay Later: What the New FICO Credit Scoring Models Mean for Your Financial Health

The Game-Changing Announcement  

FICO announced the launch of FICO® Score 10 BNPL and FICO® Score 10 T BNPL, the first credit scores from a leading provider to incorporate Buy Now, Pay Later data. This represents the most significant evolution in credit scoring in years. 

FICO® Score 10 BNPL and FICO® Score 10 T BNPL is expected to be available in the Fall of 2025. Initially, these scores will be offered alongside existing FICO scores at no additional cost to lenders. However, adoption may be slow. The most widely used model is FICO Score 8, which was launched in 2009. Credit scoring changes often take years to become widely adopted across the lending industry. 

Why This Matters for Your Financial Health: Ending "Phantom Debt"  

Previously, BNPL loans weren’t visible on credit reports, making it difficult for lenders to get a full picture of a borrower’s financial obligations. “There has been something of a blind spot,” said Adam Rust, Director of Financial Services at the Consumer Federation of America. Without this data, lenders couldn’t see if you had multiple BNPL loans when evaluating you for additional credit. 

Who's Most Affected  

Buy Now, Pay Later services are most widely used by low- and middle-income Black and Hispanic consumers, women, millennials, and Gen Z, according to the Federal Reserve. If you’re part of one or more of these groups, the new credit scoring models may have a greater influence on your financial profile. 

read more below

The Potential Benefits  

• Building Credit for First-Time Users: For consumers without established credit histories, this change presents an opportunity. "What's groundbreaking and exciting about these new scores is that they're going to allow those younger consumers to build credit and build their FICO score," says Ethan Dornhelm, vice president of FICO Scores and Predictive Analytics. 
• Score Improvements for Responsible Users: Research is promising for responsible BNPL users. FICO and BNPL provider Affirm released a study in February simulating the credit score impact of BNPL loans. It showed that most consumers with five or more BNPL loans from Affirm would experience "higher scores or no score changes". 

The Potential Risks 

• Late Payments Now Have Consequences: The biggest risk comes from missed payments. Almost a quarter of people using these loans made a late payment last year, according to the Federal Reserve. Under the new system, these late payments will directly impact your credit score. 
• Managing Multiple Loans: FICO's year-long joint study on BNPL data confirmed that a unique consumer behavior associated with BNPL loans is the potential for a large number of these loans to be opened within a short period of time. However, FICO has developed safeguards to prevent over-penalization for reasonable BNPL usage. 

Strategic Financial Planning Implications 

This change demands a strategic reassessment of how you use BNPL services. Consider whether these purchases align with your broader financial goals and whether you can reliably make all payments on time. 

BNPL usage should be viewed within the context of your overall financial strategy. Just as you wouldn't finance a vacation if it compromises your emergency fund, BNPL purchases should fit within your budget and debt management plan. 

Best Practices Moving Forward 

• Be Strategic About BNPL Usage: Only use BNPL for purchases you can afford and that align with your financial goals. 
• Maintain Payment Discipline: Set up automatic payments or calendar reminders to ensure you never miss a BNPL payment. 
• Monitor Your Credit: Check your credit reports regularly and understand which BNPL providers report to which bureaus. 
• Consider the Bigger Picture: Evaluate how BNPL fits into your overall debt management and financial planning strategy. 

This evolution in credit scoring reflects the changing nature of consumer credit. While it presents both opportunities and risks, informed consumers who understand these changes can position themselves for success. 

The key is treating BNPL loans with the same respect and caution you'd apply to any other form of credit. They're not "free money"—they're financial tools that require discipline and strategic thinking. 

Remember that sustainable financial health comes from living within your means, building emergency savings, and making strategic decisions about credit usage. BNPL can be part of a healthy financial strategy, but only when used thoughtfully and responsibly. 

At WHZ Strategic Wealth Advisors, our "Plan Well. Invest Well. Live Well. ™" process helps you navigate these complex financial decisions with confidence.  Schedule a complimentary consultation to see how we can create a strategy that provides Absolute Confidence. Unwavering Partnership. For Life. 

Authored by Vice President, Associate Financial Advisor Holly C. Wanegar, CFP®. AI may have been used in the research and initial drafting of this piece. These materials are general in nature and do not address your specific situation. For your specific investment needs, please discuss your individual circumstances with your representative. WHZ Strategic Wealth Advisors does not provide tax or legal advice, and nothing in the accompanying pages should be construed as specific tax or legal advice. Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. 697 Pomfret Street, Pomfret Center, CT 06259 and 392-A Merrow Road, Tolland, CT 06084. 860-928-2341. www.whzwealth.com.