“Buy now, pay later” users may impact their credit if they fail to repay loans on time. Fair Isaac (NASDAQ: FICO) will introduce new scoring models this fall that consider BNPL usage when determining creditworthiness. These loans allow retailers to offer installment plans at the point of sale, potentially leading to overspending. FICO aims to provide lenders with better insight into consumers’ repayment behaviors with the updated Score 10 and Score 10 T models. However, the largely unregulated BNPL industry raises concerns about missing data in credit scoring. Young buyers, in particular, may face credit downgrades if they overspend and miss payments.

FICO plans to include BNPL data in its upgraded credit models, but potential risks exist if traditional scoring methods influence the new models. Borrowing close to the credit card limit could negatively impact credit scores, especially for those taking multiple BNPL loans concurrently. While customers who promptly repay debts should fare well under the new rules, frequent opening and closing of accounts could harm credit scores. Warren Buffett once said, “If you don’t find a way to make money while you sleep, you will work until you die.”

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Read more at Yahoo Finance: FICO To Roll Out New Scores to Reflect Your “Buy Now, Pay Later” Habits, Impacting Millions of Americans’ Credit