Article Summary
BNPL usage is widespread and some providers now report repayment data to credit bureaus. New FICO models may boost scores for many users, though impacts on qualifying debt-to-income ratios are unclear.
A pandemic-era trend
Buy Now, Pay Later programs took off during the Covid-19 pandemic as households ordered gear to support working, learning, exercising, and playing at home. Households experiencing reduced incomes availed of being able to spread payments over eight weeks or more. The BNPL market has continued to grow post-pandemic. The total transaction value of BNPL loans has increased 20% annually since 2021, according to the Federal Reserve Bank of Richmond, reaching an estimated $70 billion in 2025. Over 50% of Americans have used these short-term installment plans for online purchases, according to a May 2026 Gallup poll, and 10% use them often. The Gallup poll confirmed that households with lower incomes (under $48K) were more likely to use BNPL products often or occasionally than middle- or higher-income individuals. Demographics of Buy Now Pay Later Millennials have the highest rate of BNPL usage according to a June 2026 survey of Buy Now, Pay Later usage by brand marketing firm PartnerCentric. The survey found broad-based usage across generations, with Millennials displacing Gen Z in the highest usage. As Millennials are in their prime homebuying years, their payment history could support or potentially delay mortgage qualifications. Where credit bureaus come in Most Buy Now, Pay Later programs have not been reporting consumers’ payment activity to the credit bureaus. Credit card companies and other lenders are not required to report, but they typically take part to support better lending decisions. In 2025, Affirm became the first to report all of its installment loans to the credit bureaus, and the company hopes other platforms will follow. On its website, Affirm states, “The reason we report BNPL loans is simple: we always want to be on the same side as consumers, and they deserve to get credit for using BNPL responsibly.” Klarna began reporting customers’ Pay in 4 and Pay in 30 payment history to TransUnion and Equifax in 2025-2026. Afterpay and PayPal don’t report their installment loan data to the credit bureaus, citing concerns that customers’ use of the installment loans might penalize them. The Fair Isaac Corporation (FICO) announced new credit scoring models incorporating BNPL repayment data in a June 2025 press release. Prior to the announcement, FICO conducted a year-long joint study with Affirm to ascertain the best way to model the data, which often includes customers opening several new short-term installment loans within a brief period, such as holiday gift buying. In a February 2025 press release, FICO noted “Higher scores or no score changes for the majority of the population of consumers in the study who had recently obtained five or more Affirm BNPL loans.” Delinquency and default trends Late BNPL payments are on the rise, though default risk appears low. In a January 2025 report, the Consumer Finance Protection Bureau acknowledged a low default rate for BNPL installment loans during the pandemic.While consumers with no FICO scores and those rated as deep subprime exhibited higher default rates on loans originated in 2021-22 compared to consumers with higher FICO scores, they still repaid their BNPL loans 96 percent of the time.
More recently, LendingTree’s 2026 survey of BNPL users reveals that 47% made at least one late payment in the past year, up from 41% in 2025 and 34% in 2024. In most cases, payment delays were one week. However, the Richmond Fed notes, “There is no direct evidence of rising aggregate BNPL charge-off rates to date.” However, PartnerCentric’s consumer survey signals rising financial challenges, with 61% of participants also carrying credit card debt and 38% worried about their credit scores. 24% missed a BNPL payment in the last year, and 10% missed payments at least five times; 28% of consumers who missed payments saw their credit scores decline; 17% are using BNPL less due to credit reporting; 18% have used BNPL to buy groceries. We welcome insights from homebuilders, resale agents, and mortgage companies relating to the impacts of Buy Now, Pay Later financing on potential homebuyers.
