‘Buy Now, Pay Later’ Goes on the Record: Affirm Loans to Appear on Experian Credit Reports

Edited by: TJVNews.com

A major shift is underway in the world of consumer finance, as Affirm, one of the largest “Buy Now, Pay Later” (BNPL) providers, will now begin reporting all newly issued loans—including short-term, interest-free loans—to Experian, one of the three major credit bureaus. This change, reported on Tuesday in The Wall Street Journal, is set to transform how these widely used payment plans affect your credit profile.

Until now, most BNPL loans were largely invisible to traditional credit-reporting systems. But Affirm’s decision to furnish loan data to Experian—whether paid promptly or not—marks a pivotal step in closing what The Wall Street Journal describes as a “multibillion-dollar blind spot” in the credit ecosystem.

As The Wall Street Journal report noted, Affirm’s new policy will begin on Tuesday, with all BNPL loans, including short-term “pay-in-four” arrangements, now being recorded in the same way as auto loans or mortgages. Previously, Affirm only reported its longer-term, interest-bearing loans, leaving a significant portion of its activity unaccounted for in consumer credit files.

These short-term loans, typically repaid in four equal installments over six weeks, have surged in popularity, particularly during the pandemic when consumers turned to flexible payment options for everything from shoes and cosmetics to electronics and furniture.

Although these new data points won’t immediately affect credit scores—because traditional scoring models like FICO and VantageScore haven’t yet integrated BNPL data—change may be on the horizon. Experian, according to the report in The Wall Street Journal, has confirmed it is actively working to incorporate BNPL usage into its scoring models.

A joint simulation conducted by FICO and Affirm in February offers an early glimpse into how BNPL loans might shape future credit scores. According to the information provided in The Wall Street Journal, 85% of BNPL users in the study saw score changes of fewer than 10 points after the new accounts were hypothetically added to their credit files.

While that may sound negligible, financial experts say the presence of BNPL loans on credit reports may still influence underwriting decisions, even if the impact on scores remains minimal for now. In other words, a lender might not see a major dip in your score—but they will see the debt, and that can influence risk assessments, particularly when applying for other forms of credit.

BNPL lending, once viewed as a modern alternative to credit cards, has become so widespread that regulators are beginning to take notice. The Wall Street Journal report, citing data from the Consumer Financial Protection Bureau (CFPB), reported that in 2022 alone, Americans opened more than 277 million BNPL loans totaling $34 billion, a significant increase from 180 million loans worth $24 billion in 2021.

The CFPB has raised particular concerns about “loan stacking,” where consumers manage multiple BNPL loans from different providers simultaneously. As per The Wall Street Journal report, in 2022, 63% of BNPL users had more than one loan at a time, and one-third had loans across multiple providers. Because these transactions were previously unreported, lenders evaluating loan applications—such as for car loans or mortgages—had no visibility into these debts.

As the report in The Wall Street Journal pointed out, this created a critical blind spot. An auto lender might have approved a $20,000 car loan, unaware that the applicant had just financed designer clothing or home electronics via BNPL. Affirm’s reporting shift is designed to close this data gap, creating a more transparent borrowing landscape.

Although this reporting policy currently only affects Affirm loans and Experian credit files, momentum is building. The Wall Street Journal reported that TransUnion has also begun collecting BNPL data from two providers and plans to make the information available to both lenders and consumers once the data set is more complete. It’s only a matter of time before other lenders and bureaus follow suit.

This shift is expected to lead to a new industry standard—one where BNPL loans are treated with the same level of scrutiny and accountability as credit cards, auto loans, and other mainstream debt.

According to The Wall Street Journal report, the implications for consumers are profound. If you are someone who uses BNPL services to spread out payments on purchases, your repayment behavior may now follow you, for better or worse.

“On-time payments could help build a positive credit profile, especially for younger consumers or those with thin credit files,” the Journal reported. Conversely, missing payments or taking on too much BNPL debt could raise red flags for lenders—even if the impact isn’t yet reflected in your score.

Experts caution that consumers should begin to treat BNPL loans more like credit cards than layaway plans. While the short-term, interest-free nature of many of these products might seem benign, they are now poised to carry long-term consequences if mismanaged.

As Affirm leads the way and other BNPL firms and credit bureaus prepare to follow, this development signals a new era in consumer lending accountability. As The Wall Street Journal report indicated, that was once a loosely regulated, opaque form of borrowing is now moving toward greater transparency and responsibility—a change that promises to reshape how Americans borrow, spend, and manage credit in the digital age