FICO to launch credit scores incorporating buy now, pay later data

NEW YORK - FICO (NYSE: FICO), the $43.93 billion market cap credit scoring giant with impressive gross profit margins of 80.83%, announced Monday it will introduce two new credit scoring models that incorporate buy now, pay later (BNPL) loan data, marking the first such offering from a major credit scoring provider. According to InvestingPro analysis, FICO maintains a "GREAT" financial health score, positioning it well for this strategic expansion.

The FICO Score 10 BNPL and FICO Score 10 T BNPL models are scheduled to become available in Fall 2025, according to the company’s press release statement.

The new scores aim to provide lenders with more comprehensive visibility into consumers’ repayment behaviors by including BNPL transactions alongside traditional credit data. FICO developed a method to aggregate multiple BNPL loans when calculating certain variables, addressing the tendency for consumers to open numerous BNPL loans in short timeframes.

"Buy Now, Pay Later loans are playing an increasingly important role in consumers’ financial lives," said Julie May, vice president and general manager of B2B Scores at FICO.

FICO consulted with major U.S. lenders during development, who supported integrating BNPL data into credit scoring models. The company indicates this approach may increase credit scores for some BNPL borrowers.

The new scoring models will initially be offered alongside existing FICO Score versions at no additional fee from FICO. This allows lenders to evaluate the BNPL-enhanced scores while continuing to use current models.

FICO’s research included a year-long study on BNPL data to determine the most effective approach for incorporating these increasingly common short-term financing arrangements into credit risk assessment.

In other recent news, Fair Isaac Corporation has been active with several notable developments. The company has priced $1.5 billion in senior notes due in 2033 with a 6.000% yield, aimed at repaying existing debts and funding general corporate purposes. BofA Securities has raised its price target for Fair Isaac to $3,700, maintaining a Buy rating, following insights gained from the FICO World event, which highlighted the company’s growth prospects. Similarly, Jefferies increased its price target to $2,500, also keeping a Buy rating, and noted advancements in Fair Isaac’s scoring business and software platform. Baird upgraded Fair Isaac’s stock rating from Neutral to Outperform, citing a favorable risk/reward scenario despite regulatory risks. Concerns arose from potential changes in the mortgage credit scoring landscape, notably the privatization of Government-Sponsored Enterprises, which could impact FICO’s volumes. However, RBC Capital maintains a positive outlook, suggesting that FICO’s pricing power and industry standard status remain intact. These developments reflect ongoing confidence in Fair Isaac’s market position and future performance.

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