BOZEMAN, Mont.– FICO has launched FICO Score 10 BNPL and FICO Score 10 T BNPL, which it said are the first credit scores from a leading credit scoring provider to incorporate buy now, pay later (BNPL) data. According to FICO, the scores wee developed using data-driven research and represent a “significant advancement” in credit scoring, “accounting for the growing importance of BNPL loans in the U.S. credit ecosystem.”
The company said as key additions to the FICO Score 10 Suite, the BNPL versions of FICO Score 10 are poised to further enhance financial inclusion by applying FICO’s innovative approach to incorporating BNPL data along with mainstream credit reports.
“These scores provide lenders with greater visibility into consumers’ repayment behaviors, enabling a more comprehensive view of their credit readiness which ultimately improves the lending experience,” the company said.
‘Unique Consumer Behavior’
FICO reported its 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.”
To address the issue, FICO said developed an innovative approach that includes aggregating separate BNPL loans together when calculating certain in-model variables.
“This novel treatment has proven effective at capturing predictive signal from the inclusion of BNPL data while increasing FICO Scores for some BNPL borrowers,” FICO said.
In developing these new scores, FICO said it sought input from many of the largest lenders in the U.S. where it found “broad consensus” that integrating BNPL data into credit scoring is a critical advancement that allows lenders to make more informed, accurate decisions while responsibly expanding credit access.
No Additional Fee
FICO Score 10 BNPL and FICO Score 10 T BNPL will initially each be offered side-by-side with existing versions of the FICO Score, at no additional fee, FICO reported.
