BNPL: A New Path to Building Credit

The concept of building credit can be intimidating, especially for those with little credit experience or damaged credit histories. Consumers often find themselves confused by a variety of entry-level products, staying outside the credit ecosystem for extended periods, according to Fintech Futures.

A recent shift, however, could change that. The integration of Buy Now, Pay Later (BNPL) data into traditional credit scores promises to revolutionize credit reporting. BNPL is a short-term financing option that allows consumers to make purchases, like buying sneakers, and build credit without paying extra. As Liz Pagel notes, BNPL provides consumers with «valuable credit experience on their path toward financial success.»

BNPL has already become a game-changer in the financial world. According to the TransUnion Consumer Pulse Survey Q2 2024, over 100 million consumers have used BNPL, with 89% expressing satisfaction. While some argue BNPL could lead to poor credit behavior, Pagel suggests that for many, particularly younger consumers, it can be a responsible tool for building credit.

Although BNPL data is not yet part of traditional credit scores, this change is on the horizon. Pagel predicts that lenders will soon benefit from the valuable data provided by BNPL, potentially increasing financial inclusion and offering new opportunities for consumers to build credit quickly.