Two of the biggest names in buy now, pay later are taking a stand. Klarna and Afterpay refuse to share consumer loan data with credit bureaus until they have proof their customers won’t be unfairly penalized by traditional credit scoring systems.
This digital financing rebellion creates a major roadblock for FICO’s ambitious plan to modernize credit scores. With over 90 million Americans expected to use BNPL services in 2025 and the global market projected to hit $560 billion this year, the stakes couldn’t be higher for lenders, consumers, and the entire credit ecosystem.
FICO’s Revolutionary Credit Score Plans Hit a Wall
FICO announced in June 2025 the launch of FICO Score 10 BNPL and FICO Score 10 T BNPL, the first credit scores from a leading provider to incorporate buy now, pay later data. These groundbreaking models were designed to give lenders better visibility into modern consumer borrowing habits.
The timing seemed perfect. BNPL usage has exploded across demographics, with Gen Z adoption rates climbing from 36.8% in 2021 to a projected 47.4% by 2025. Yet just as FICO prepared to launch these scores this fall, major industry players pulled the plug on data sharing.
“Credit reporting, scoring and interpretation still largely operate under legacy frameworks,” said Juan Hernandez, head of credit and underwriting at Block, Afterpay’s parent company. This statement captures the core tension between innovative payment methods and outdated credit infrastructure.
The Consumer Protection Argument
Klarna and Afterpay’s resistance centers on legitimate consumer concerns. “The goal is to ensure that no consumers are harmed” by companies furnishing BNPL data, explains Financial Technology Association spokesperson Miranda Margowsky.
The companies worry about several specific risks:
Multiple Credit Line Confusion: Traditional credit scoring treats each new account as opening a line of credit. BNPL users might open dozens of these short-term accounts monthly, potentially devastating their credit scores despite responsible payment behavior.
Real-Time Data Gaps: “It appears the bureaus are still not capturing real-time BNPL data, which could lead to not having an accurate picture of a consumer’s financial health,” Margowsky notes. This lag could create misleading credit profiles.
Legacy System Incompatibility: Current credit scoring models weren’t designed for the unique behavior patterns of BNPL users, who frequently open and close short-term payment accounts.
Affirm Charts a Different Course
While Klarna and Afterpay resist, competitor Affirm has embraced credit reporting. Affirm became the first major BNPL provider to begin sharing consumer data with credit bureaus Experian and TransUnion in the spring.
This strategic difference highlights a fundamental industry split. Affirm sees credit reporting as a competitive advantage that could help responsible borrowers build credit history. Meanwhile, Klarna and Afterpay view it as a potential liability for their customers.
Early results from FICO’s study with Affirm show promise. FICO found that BNPL data affected credit scores by roughly 10 points for over 85% of those surveyed, with most consumers experiencing higher scores or no changes.
Market Impact and Industry Consequences
The data sharing standoff affects a massive and growing market. The global BNPL payment market is expected to grow by 13.7% annually to reach $560.1 billion in 2025, with continued growth projected at 10.2% CAGR through 2030.
This resistance creates several immediate challenges:
Incomplete Credit Pictures: Lenders lack full visibility into consumer debt loads when major BNPL providers withhold data. This “phantom debt” problem could lead to inadequate risk assessment.
Competitive Disadvantage: BNPL providers refusing to share data may lose ground to competitors who embrace credit reporting as a value proposition for responsible users.
Regulatory Pressure: As BNPL usage grows, regulators may mandate data sharing regardless of provider preferences.
The Federal Reserve has already noted concerns about BNPL’s rapid growth. A leading BNPL provider experienced 50% growth in lending between 2021 and 2024, according to quarterly earnings reports. This explosive expansion makes the data sharing debate increasingly urgent.
Consumer Implications and Financial Health
For the 90 million Americans using BNPL services, this standoff has mixed implications. Consumers using Klarna and Afterpay avoid potential credit score damage from poorly implemented reporting systems. However, they also miss opportunities to build credit history through responsible BNPL usage.
Credit experts note the broader trend toward recognition of BNPL as mainstream consumer credit. “A lot of BNPL users are often young people who don’t have long credit histories,” explains Ted Rossman, chief credit analyst at Bankrate. “That’s the more optimistic use case, that these people could be brought into the credit system.”
The demographic impact is significant. BNPL usage is highest among Black women aged 25-44 and young adults 18-24, groups that could particularly benefit from alternative credit-building opportunities.
Regulatory Environment Shifts
The regulatory landscape adds complexity to this standoff. Under the Trump administration, the Consumer Financial Protection Bureau dropped planned enforcement that would have treated BNPL providers like credit card companies. This regulatory rollback gives providers more flexibility but less consumer protection guidance.
State-level regulations vary significantly, creating a patchwork of compliance requirements. Some advocates worry that without federal standards, consumers in different states face unequal protection from potential credit score damage.
Technology and Innovation Challenges
The standoff highlights fundamental technology challenges in modernizing credit infrastructure. BNPL transactions behave differently from traditional credit, requiring new approaches to data aggregation and risk assessment.
FICO developed an innovative approach that includes aggregating separate BNPL loans together when calculating certain in-model variables. This technical solution addresses some concerns about frequent account opening and closing, but provider confidence remains limited.
Machine learning and artificial intelligence offer potential solutions. Several BNPL providers use AI-driven risk assessment internally but worry about how traditional credit bureaus will interpret and process this data.
Future Outlook and Resolution Paths
The credit reporting standoff will likely resolve through several possible paths:
Industry Standards Development: Credit bureaus, FICO, and BNPL providers may collaborate on specialized reporting standards that address provider concerns while meeting lender needs.
Regulatory Intervention: Federal or state regulators might mandate uniform BNPL reporting requirements, forcing provider compliance regardless of preferences.
Consumer Pressure: As awareness grows about credit-building benefits, consumers might demand BNPL credit reporting from their preferred providers.
Competitive Dynamics: Providers embracing credit reporting might gain market share by offering credit-building value propositions.
Strategic Recommendations for Consumers
While this industry standoff continues, consumers should take proactive steps to protect and improve their credit profiles:
Monitor all BNPL usage carefully, regardless of whether it appears on credit reports. Multiple payment obligations can strain budgets even without credit score impact.
Consider diversifying BNPL usage across providers that do and don’t report to credit bureaus, balancing credit-building opportunities with score protection.
Maintain traditional credit accounts alongside BNPL usage to ensure comprehensive credit history development.
The Bottom Line
The BNPL credit reporting standoff represents a pivotal moment in consumer finance evolution. Klarna and Afterpay’s resistance to data sharing reflects genuine concerns about consumer protection in an outdated credit system. However, their stance also limits credit-building opportunities for millions of users.
This conflict will ultimately reshape how alternative credit products integrate with traditional lending infrastructure. The resolution will determine whether BNPL becomes a pathway to financial inclusion or remains separate from mainstream credit building.
As the $560 billion BNPL market continues expanding, pressure will mount for industry-wide standards that protect consumers while enabling responsible credit development. The companies that successfully navigate this transition will likely dominate the next generation of consumer lending.
