FICO's decision to begin integrating buy now, pay later (BNPL) data into credit scores this fall has raised alarms, especially among Gen Z users who heavily utilize this payment method. BNPL, which often involves splitting payments into four interest-free installments, does not operate like traditional credit, which complicates its integration into credit scoring. With BNPL popularity surging, expected to reach $108 billion by 2025, concerns about late payments are growing, particularly as 41% of users reported late payments. This shift in credit scoring may influence Gen Z's financial behaviors significantly.
FICO's decision to include buy now, pay later data in credit scores this fall raises concerns about its impact, particularly on Gen Z users who frequently rely on BNPL.
The surge in buy now, pay later loans, particularly among younger consumers, necessitates careful monitoring. The FICO move signifies growing recognition of this financial trend.
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