Key facts
- Millions of U.S. consumers use Buy Now/Pay Later (BNPL) options for various purchases.
- Most BNPL operators do not report payment history to credit bureaus.
- Reporting BNPL payment history could help some consumers qualify for mortgages.
- The impact of BNPL installment loans on buyers' debt-to-income ratios is unclear.
- Affirm was the first BNPL provider to report all installment loans to credit bureaus.
- FICO is developing credit scoring models that incorporate BNPL repayment data.
Millions of U.S. consumers utilize Buy Now, Pay Later (BNPL) services for a wide range of purchases, from technology and clothing to travel and necessities. These installment financing programs typically do not charge interest and do not perform a hard credit check. However, most BNPL operators do not report payment history to credit bureaus, which can hinder consumers with positive payment records from building credit and potentially obscure excessive use or poor payment history for others.
Homebuilders serving first-time homebuyers often identify a lack of credit history as a significant barrier to qualification. If BNPL providers begin reporting responsible usage and prompt payments, more potential first-time homebuyers may be able to qualify for mortgages. The precise impact of BNPL installment loans on buyers' debt-to-income ratios, however, remains unclear.
BNPL platforms like Afterpay, PayPal, Klarna, and Affirm allow shoppers to pay in installments, often with the first payment due upfront, and receive merchandise immediately without interest charges over the payment period. Merchants typically pay BNPL operators fees ranging from 4% to 6% of the purchase price. The Federal Reserve issued an overview of BNPL in June 2026, ranking providers by their domestic "pay in 4" volume.
Klarna allows payments through various methods, including Apple Pay, its app, or a branded credit card, serving over 120 million customers and 1.2 million merchants. Affirm offers flexible payments, with interest rates from 10% to 36% APR for larger purchases spread over longer periods, and partners with Priceline for travel financing.
BNPL services saw a surge in popularity during the COVID-19 pandemic as households sought ways to manage finances while ordering goods for home use. The market has continued to expand post-pandemic, with transaction values increasing by 20% annually since 2021 to an estimated $70 billion in 2025, according to the Federal Reserve Bank of Richmond. A May 2026 Gallup poll indicated that over 50% of Americans have used these plans for online purchases, with 10% using them frequently. Lower-income households (under $48,000) were more likely to use BNPL products than middle- or higher-income individuals.
Millennials exhibit the highest rate of BNPL usage, according to a June 2026 survey by PartnerCentric, potentially impacting their mortgage qualifications as they are in their prime homebuying years. While most BNPL programs have not reported to credit bureaus, Affirm began reporting all installment loans in 2025, aiming to align with consumer interests. Klarna started reporting its 'Pay in 4' and 'Pay in 30' data to TransUnion and Equifax in 2025-2026. Afterpay and PayPal currently do not report installment loan data, citing concerns about potentially penalizing customers.
In June 2025, FICO announced new credit scoring models that incorporate BNPL repayment data, following a year-long study with Affirm. FICO noted in February 2025 that the majority of consumers in the study with recent Affirm BNPL loans saw no score changes or higher scores. Delinquency rates for BNPL payments have been rising, though default risk remains low. A January 2025 Consumer Finance Protection Bureau report acknowledged low default rates during the pandemic, with consumers repaying BNPL loans 96% of the time. However, a 2026 LendingTree survey found 47% of BNPL users made at least one late payment in the past year, up from previous years, though payment delays were typically short. The Richmond Fed has not observed rising aggregate BNPL charge-off rates.