Americans warned mass credit score drop is coming

Knewz ^ | 9/26/2025 | By Samyarup Chowdhury

[EBH]

Imminent changes to the U.S. credit scoring system could see millions of Americans face lower credit scores as FICO prepares to incorporate “buy now, pay later” (BNPL) loan data into its calculations this fall. Knewz.com has learned that the move reflects the growing prevalence of BNPL services, which allow consumers to spread out payments with little or no interest, but experts warn that the change may negatively affect users who struggle to make timely payments.

BNPL services have surged in popularity, with an estimated 81.5 million Americans using them in 2024 and projections reaching 91.5 million in 2025, according to Capital One Shopping. Originally designed to ease payments on discretionary purchases, BNPL has expanded into essential spending: 47% of users apply it to groceries and 35% to medical bills. “BNPL offers benefits relative to other credit products that charge higher interest rates, such as credit cards, payday loans, car title loans,” Aditi Routh, an economist at the Federal Reserve Bank of Kansas City, said in a statement. “Consumers can reduce or avoid high costs or interest charges, making them better-off.” Yet she cautioned that late payments may signal overspending, overextension or worsening financial situations, requiring monitoring by researchers and policymakers.

Historically, BNPL arrangements did not affect credit scores. However, that will soon change, potentially creating a significant impact for users juggling multiple loans. LegalShield’s survey of more than 2,000 adults found 62% of BNPL users managed multiple loans simultaneously, and 41% reported making a late payment in the past year, up from 34% the year prior. Rebecca Carter, attorney and LegalShield provider, explained, “The greatest legal risk with BNPL arrangements stems from consumers not fully understanding the contractual terms. Many plans include added costs or interest if balances are not paid within a specified period. Beyond that, consumers often underestimate their broader cost-of-living expenses, which can lead to financial strain. As a result, they may increasingly rely on BNPL for everyday necessities. Because these are typically smaller loans with modest monthly payments, it is easy for consumers to dismiss them as 'affordable' without considering the cumulative impact of multiple obligations.”

According to reports, a substantial number of consumers remain unaware of the upcoming FICO changes. LegalShield found that 38% of Americans did not know BNPL data would soon factor into credit scores. Billing errors and disputes are also common: 62% reported billing errors, and 45% had faced legal or contractual disputes over BNPL loans. “It is not surprising that such a large percentage of consumers remain unaware,” Carter said. “Many individuals who rely on BNPL options are already financially vulnerable and focused on meeting immediate needs. Long-term considerations, such as the effect on credit scores, often do not receive the same level of attention in the moment.”

FICO has said that its updated scoring system, part of the FICO Score 10 Suite, will allow lenders to evaluate credit readiness more accurately, particularly for first-time credit users. Julie May, FICO’s vice president of B2B Scores, said, “This innovation also supports our mission to expand financial inclusion by helping more consumers gain access to credit.” While the exact rollout date has not been specified, the changes are expected this fall. Reports have mentioned that consumers with multiple BNPL loans or a history of late payments may see declines in their scores.

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TOPICS:
KEYWORDS: bnpl; credit; creditscores; dputztdstroll; fico

[EBH]

There's the other 'blip' on the map. School loans and this has been the hidden one in the closet still.

[Jonty30]

People are paying Uber later for services now. It is nuts.

[MeneMeneTekelUpharsin]

Proverbs 22:7 "The rich rules over the poor; and the borrower becomes the lender's slave."

[albie]

My bathroom was redone on a one year no interest loan. I guess that’s included in this

[noiseman]

If you’re using delayed payment plans for minor daily expenses then you are a high credit risk and your score should go down. That kind of behavior would seem to me to be the next to last warning sign, only exceeded by missed payments.

[Crusher138]

I just purchased a computer…$1700-ish. At checkout they offered 6 monthly payments with no interest. Started to take it then it popped up some BS that felt of, so I just paid for it. I have the $1700, but free money is free money. No interest loan, when you can afford it, is good for liquidity.

[catnipman]

amazon now includes a Klarna payment option at checkout on most items ...

[dpetty121263]

This Trump economy not doing as well as some claim, the Dollar is shrinking and so people do what they have to do. I know my Dollar has gone just about as far as it will.

[Kleon]

This Trump economy not doing as well as some claim

We're still dealing with Biden inflation, but I wish Trump were more focused on improving things for people struggling right now instead of raging about escalators. Tariffs are important, but they're going to be a source of pain for years to come. And now he's looking for tariffs on furniture?

[montag813]

That’s funny, I always assumed that by now pay later services like klarna were already included in FICO scores. After all it’s just debt like anything else.

[EVO X]

I never paid much attention, so I thought I would take a look. One of my credit cards offer flex pay for a fee and no interest on certain purchases over $75. I would assume the flex pay payment would be added on to the monthly minimum payment, so someone with cash flow problems could have a problem.

[dpetty121263]

Agreed he has not focused on the average American much at all than other things that could and should take a back seat like these tariffs, world peace, and some revenge. People are hurting and not much is being done and as people vote their pocket books I sense an easy win for Democrats.

[dpetty121263]

I suspect reason is he is not as that takes work and he is looking for the low fruit for easy wins and a little ego, besides who cares about the little guy...

[utax]

Love TransUnion. Got a letter from them this past week:

“We are writing to make you aware of a cyber incident involving unauthorized access to some of your personal data that was stored on a third-party application, Importantly, no credit information was accessed.”

“We regret any concern caused by this incident and take seriously the responsibility to help secure consumer information.”

The kicker - “The info was limited to specific data elements and did not include credit reports or core credit information. In your case, the information involved included your SSN and DOB.”

So, appartently, SSN and DOB are NOT considered core credit information?

How do these sloppy credit organizations stay in business???

[arthurus]

I keep my card paid off on-line and several times a month. It has become a sort of videogame for me to make that current charges number ZERO at least weekly and usually more often. It has ben a couple of decades since I felt that nag to put off a payment so as to acquire something I sure would like to have now.

[dfwgator]

The Democrats will start touting Credit Card Debt forgiveness.

Student loans were the trial run.

[sauropod]

Truth

[Made In The USA]

I don’t have a BNPL loan, but if I did choose to use it as a zero interest option what would be the big deal? If I put something on a credit card, that debt is somehow better?

I could see use of a payday loan or title company as being considered a bad sign.

[arthurus]

That is how to do it. I buy vehicles when I need to but only if I can pay cash. So I buy automotive rats. If one buys an old car or bike for cash one is still going to be making payments- for repairs and such, but those payments are on MY schedule, not the bank’s. If I need brake work and can’t pay for it right now, I can park the thing and get around on buses or walk or get rides to work from colleagues until I have the money to make that “payment.” I can’t put off a payment to the bank and such payments come due much more rapidly than getting stuff fixed.

[goodnesswins]

At our age, and financial situation, we find our credit rating reports a joke.