Your credit score could soon be impacted by ‘pay later’ loans. Details about the change.

Clicking the “pay later” option at checkout could start impacting your credit score in the coming weeks.

In February, the credit scoring agency FICO announced it would begin factoring Buy Now, Pay Later (BNPL) loans, like those offered by Affirm and Afterpay, into its credit scores in fall 2025. While some BNPL servicers have recently begun taking steps to report customer habits to credit agencies on their own − such as Affirm to Experian and TransUnion and Klarna to TransUnion − FICO is the first to create a scoring formula that incorporates BNPL payments.

FICO scores are used in the majority of lending decisions in the U.S. and are formulated based on a consistent payment history, which means missing or making a payment could now result in more than a minor late fee.

As the time for FICO to roll out its new scoring algorithm draws closer, here’s what to know before your credit score is impacted.

Buy Now, Pay Later loans (BNPL) offer consumers the option to pay for purchases in installments, usually with no or minimal interest, no hard credit check and near-instant approval.

Services like Affirm, Klarna, Afterpay and PayPal Pay Later usually offer the option to pay in a set number of installments at checkout for consumers shopping online. Depending on the size of the purchase and app, consumers can select the number of payments, how frequently they occur and what fees they are willing to pay, if any. The model also offers the unique opportunity for consumers to have multiple loans with the same or different providers open at once.

Until recently, one advantage of BNPL loans was the lack of impact on credit scores. Approval for these loans does not require hard credit inquiries, meaning consumers don’t receive credit score dings for applying or using them, and they were not previously reported to credit agencies as part of the formula for determining credit rating.

Then, in February, FICO announced it would begin factoring BNPL loans into people’s credit scores starting in the fall of 2025.

FICO (Fair Isaac Corporation) is a credit scoring model with a proprietary algorithm that considers a variety of information contained in consumers’ credit bureau reports. It is frequently used by many major lenders (up to 90%, according to FICO) in the U.S. to make decisions about loan offers.

FICO has not given a specific date or timeline for when consumers will begin seeing an impact on their credit score based on BNPL data.

FICO told USA TODAY in a Sept. 12 statement that the two credit score systems it has developed to incorporate BNPL loans − FICO Score 10 BNPL and FICO Score 10 T BNPL − are not yet live but are “expected to be available this fall as expected.”

The changes will likely not be immediately apparent to consumers, according to FICO and previous USA TODAY reporting.

Lenders looking to run credit checks will not have access to these new score types until the relevant Credit Reporting Agencies (CRAs) have received enough data from BNPL providers, said FICO. Lenders will not be able to use the new scoring models until the necessary store of information has been gathered.

Consumers also aren’t likely to notice a significant impact right away, NerdWallet spokesperson Sara Rathner previously told USA TODAY, as lenders adopting new scoring take time.

“Different scoring models are designed for different focuses,” Rathner said. “It could be years before these are largely adopted in decision-making and they might not be adopted by lenders for all types of borrowing. “

As of mid-September 2025, FICO is the only credit scoring model that includes a protocol for incorporating BNPL loans into scores.

The impact on consumers depends on how major credit agencies (TransUnion, Equifax and Experian, and private lenders) choose to incorporate FICO Score 10 BNPL and FICO Score 10 T BNPL.

According to a joint study simulating the inclusion of BNPL data with Affirm, FICO found score impacts were generally consistent with the opening of a new account, meaning scores improved or decreased by about 10 points for the majority of consumers. It also found that the majority of consumers who had obtained five or more Affirm BNPL loans saw either a higher score or no impact.

“The impact that BNPL loans will vary by consumer depending on the consumer’s overall credit profile, as well as the information contained on the BNPL loan(s) in question,” FICO said in a statement.

FICO has also maintained since its initial announcement that this change will help consumers with “limited to no traditional credit” to receive and improve their scores.

Rathner also previously told USA TODAY this could be a net positive for people who use BNPL loans responsibly, as it could give them more recognition for their habits of paying off loans on time.

However, with BNPLs being used increasingly for essentials instead of luxuries, the impact could quickly become negative for people using them because they are already financially strapped. A September study by LegalShield, for example, found that 47% of BNPL customers use loans to pay for groceries and 35% for medical bills. Nearly half of BNPL users (49%) have missed at least one payment, the study found.

“Buy now, pay later can be an incredible tool,” Rathner said, if you “enter in knowing you have the money to pay it off.”

Contributing: Rachel Barber, Medora Lee, USA TODAY

This article originally appeared on USA TODAY: Do Buy Now, Pay Later loans impact credit score? They will soon