BNPL Impact on Credit Score - Multiple Trades
FICO/Experian BNPL Study (Continued)
How would multiple BNPL loans impact a FICO score?
◼️ The Data
One US BNPL operator.
600,000 consumer files.
Reported as installment loans.
During the period of Jul-Sep 2020.
The operator performed a soft inquiry for each newly opened account.
14% of customers have multiple trades; the majority only have 2 trades.
◼️ The Finding
Multiple BNPL trades do not seem to impact the FICO score much.
The graph below shows - the scores generally are insensitive as the number of BNPL trades increases.
◼️ The Explanation
Multiple factors offset each other.
🔹Increased thickness of the file
🔹Lower age of accounts
◼️ The Future
It would be interesting to see future studies on:
Trades from different BNPL operators
A mix of installment and revolving credit
Hard inquiry during the account application
Longer-term impact with various performance
Read the full FICO blog
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