When buy now, pay later (BNPL) services first went mainstream, they seemed like a harmless convenience—split a purchase into four interest-free payments, no credit card required. But starting in late 2025, the seemingly low-risk decision to use Klarna, Affirm, Afterpay, or a similar service could have a greater impact on your family's financial future than ever before.

FICO, the company behind the most widely used credit scoring system in the United States, is launching two new models—FICO Score 10 BNPL and FICO Score 10 T BNPL—that will incorporate BNPL activity into your credit profile. Until now, most BNPL transactions have escaped traditional credit reporting, preventing lenders from gaining a complete picture of a household's true borrowing habits.

Why BNPL Data Is So Important for Households Now？

BNPL is rapidly gaining popularity among younger consumers and families looking to save money without taking on high-interest debt. But because these short-term loans rarely appear on credit reports, they don't help (or hurt) a credit score, meaning a family's risk profile may appear clearer than it actually is.

Now, paying BNPL loans regularly and on time can help those with weak credit histories build their credit history, such as recent graduates or new immigrants to the US. However, missing payments, accumulating multiple BNPL loans, or relying on BNPL for ongoing cash flow can quickly lower a credit score.

Potential Benefits for Families

Build credit faster for young people—Teens and young adults in your family who are just starting their financial journey may be able to build a credit history without a credit card.

Provide better access to loans for credit-hidden families—Immigrant families, those recovering from bankruptcy, or those with limited credit activity may have an easier time obtaining necessities like car loans or mortgages.

More Accurate Lending Decisions—Lenders can better determine loan approvals and interest rates, reducing unexpected rejections.

Risks That Can't Be Ignored

The Overextending Trap—BNPLs can easily lead you to take on more money than you can afford, especially if multiple purchases are on different repayment plans.

Score Volatility—Because BNPL loans are short-term, your score may rise or fall more quickly than with traditional credit lines.

Hidden Costs—While BNPL is advertised as interest-free, late fees and missed payments can quickly eat into a household budget and directly impact your credit profile.

FICO's BNPL scoring model brings the "invisible" world of short-term installment loans into the credit spotlight. For households, this presents both an opportunity to strengthen their financial well-being and a warning to treat BNPL with the same seriousness as credit cards or personal loans.

Handled properly, this shift can help households gain access to better borrowing opportunities. Handled improperly, it can turn convenience into costly frustration—one installment at a time.