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  • Frank Tian

BNPL Impact on Credit Score - Multiple Trades

FICO/Experian BNPL Study (Continued)


How would multiple BNPL loans impact a FICO score?


Suna Hafizogullari, senior director, FICO Scores and Predictive Analytics, shared the study result in a recent FICO Blog.


◼️ 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.


Positive:

🔹Increased thickness of the file


Negative:

🔹Lower age of accounts

🔹Higher debt


◼️ 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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