The buy now, pay later company Affirm will begin reporting all BNPL transactions to the credit bureau Experian beginning April 1, but the firm is not the only industry player reporting its payment data to one of the three major credit rating bureaus.

Two buy now, pay later companies report data to TransUnion, said Liz Pagel, a senior vice president for that company, although she declined to say which companies and when they started reporting. Others may follow suit.

“Experian is in active conversations with leading BNPL providers to expand the reporting of this information,” an Experian spokesperson said in an email, but declined to provide further details.

San Francisco-based Affirm is currently only reporting BNPL transaction data to Experian, an Affirm spokesperson said. The spokesperson confirmed that the company reported some monthly installment loans to Experian prior to the company’s Wednesday announcement, but declined to say precisely when the firm started reporting that information.

However, BNPL payments won’t impact a consumer’s credit score for some time, said Pagel, who is also global head of alternative data for the Chicago-based bureau. Buy now, pay later is a new credit product, which bureaus have not seen for some time, she said.

“These are products that we’ve never seen before, and in most of our careers, there’s not been a new product coming into people’s credit reports,” she said.

Affirm’s major competitors include Sydney, Australia-based Zip; Minneapolis-based Sezzle; Stockholm, Sweden-based Klarna and Afterpay, which is owned by Oakland, California-based Block. 

Sezzle gives users the option of reporting their transactions to a credit bureau, a Sezzle spokesperson said in an email.

When reached for comment, a Klarna spokesperson referred to a May 2024 blog post explaining that Klarna does not report any transaction data to U.S. credit bureaus because those bureaus have yet to develop a proper model for responsibly processing that data.

The bureaus are working on that, Pagel said. In addition to TransUnion and Dublin-based Experian, the big three nationwide bureaus also include Atlanta-based Equifax. An Equifax spokesperson did not respond to a request for comment.

Generating a credit score for a consumer is not as simple as seeing if they make payments on time, she said. Heavy use of unsecured installment loans, for example, can damage a credit score, Pagel said.

“And these do look like unsecured installment loans,” she said of buy now, pay later transactions. “If I took out 10 of those this year, that’s a really big risk signal that there’s something wrong with my cash flows and my ability to manage credit.”

But BNPL companies “want me to take everything that I spent $500 on this year and pay it over time, and that's correctly using their product,” Pagel said.

Such nuances need to be worked out before buy now, pay later loans can be incorporated into credit scores, she said.

Spokespeople for Zip and Block did not respond to requests for comment.

Whether or not the change benefits consumers depends entirely on how the credit bureaus and lenders decide to use BNPL data, said Chi Chi Wu, a senior attorney for the National Consumer Law Center.

Frequent use of some credit products — such as payday loans — can signal that a consumer is cash-strapped, Wu said.

“Now, we're going to tell other lenders when you’ve got these [buy now, pay later] loans,” she said. “And if they don't want to lend to someone with a lot of BNPL loans, well now they know.”

And to the extent a BNPL user doesn’t perform well on repayments, that’s almost certain to be recorded for all to see as well.

Some analysts, however, hope that more companies will follow Affirm’s lead.

Reporting buy now, pay later payments to credit bureaus mostly helps consumers, said Ted Rossman, senior industry analyst for the financial services company Bankrate.

“The BNPL industry needs to share more data, and the credit reporting industry needs to figure out how to incorporate BNPL into their models,” he said. “There’s a lot for consumers to potentially gain here, since many BNPL users are younger and skew toward the lower end of the credit spectrum. If you have little credit info on file or a bad credit score and use BNPL responsibly, that could help you at some point.”

However, he cautioned that the buy now, pay later credit reporting is still “in the early stages.”

BNPL “doesn't fit neatly with our traditional understanding of credit,” Rossman said. “For example, frequent account openings and closings are a feature of BNPL but would be disastrous for your credit if you opened and closed credit cards every few weeks.”

Reporting more data to credit bureaus could help further legitimize the buy now, pay later industry, said Ian Moloney, head of policy and regulatory affairs for the American Fintech Council.

“It shows that it’s moving from an emerging product where some of the traditional systems didn’t exactly know how to engage with it,” he said. “Now, it’s an established product.”

But the big winner is Experian, Wu said.

“They're a data broker,” she said. “The more data they have, the more attractive their reports are for lenders.”