We’ve been working with the largest providers of buy now, pay later (BNPL) products since 2016 and believe they’ve done an incredible job meeting consumers where they are. Over the last several years, we’ve been working alongside our partners to seek out unsolved problems and create products and technologies that will help transform the way businesses operate and consumers thrive.
One current challenge facing the industry is the underreporting of BNPL information on consumer credit reports. While we work with many of the largest BNPL providers, the majority of BNPL accounts are not reported to credit bureaus because today’s most used score models are designed to predict risk based on payment behaviors of mainstream credit products, not BNPL accounts. In fact, reflecting BNPL information on credit reports as traditional loans or lines of credit can create negative impacts to consumer credit scores, even when BNPL products are used responsibly. This has, justifiably, prevented many BNPL providers from reporting BNPL payment information.
At the same time, the underreporting of this information has created blind spots for traditional lenders as well as BNPL providers. Traditional lenders are unable to gain a complete view of consumers’ financial obligations, which limits their ability to accurately assess risk. This has also prevented BNPL providers from gaining a view of how consumers are managing payments with other providers of BNPL products.
At Experian, it’s our job to do what is right by consumers while providing lenders with the insights and tools necessary to make smart decisions. Credit scores should not be negatively impacted simply based on a consumer’s decision to use a BNPL product over other, more traditional forms of credit.
To solve for this, Experian will debut The Buy Now Pay Later Bureau™ later this spring. This first-of-its kind bureau will protect consumer credit scores from negative impact while driving more inclusive and responsible lending.
The Buy Now Pay Later Bureau will allow BNPL providers to furnish data on all types of point-of-sale products – enabling a comprehensive view of consumer payments, including the number of outstanding BNPL loans, total BNPL loan amounts and BNPL payment status. To protect consumer credit scores from immediate negative impact, detailed information related to each BNPL transaction will be stored separately from Experian’s core credit bureau data.
Through our specialty bureau, lenders can access the real-time insights they need drive responsible and inclusive lending, while protecting consumer credit scores. Not only that, The Buy Now Pay Later Bureau can help more consumers gain access to fair and affordable financial services. By gaining a more complete view of consumer’s BNPL repayment behaviors, lenders can provide thin-file or subprime consumers who would otherwise be denied credit with first or second chances.
We are committed to giving BNPL providers the confidence they can report information to us without negatively impacting consumer credit scores.
And with the introduction of The Buy Now Pay Later Bureau, we can do just that – and much more.