Congressional Democrats Ask FICO to Rethink BNPL Credit Scoring
Commentary by Steven Lofchie
Congressional Democrats urged Fair Isaac Corporation (a/k/a "FICO"), a data analytics company, to delay plans to include Buy Now, Pay Later ("BNPL") data in consumer credit scores until reporting standards are established.
In their letter, the representatives warned that without a legal requirement for BNPL providers to furnish complete, standardized data to credit reporting agencies, consumers’ credit profiles could be distorted by incomplete information. The representatives cited the rescission of the Consumer Financial Protection Bureau’s 2024 interpretive rule defining BNPL as credit, arguing that the resulting regulatory ambiguity threatens working Americans and disproportionately harms low-income and minority consumers. They acknowledged that BNPL offers financial flexibility and access to credit, particularly for lower-income households and communities of color, but cautioned that inaccurate or selective reporting could harm those who rely on BNPL products for financial stability.
The representatives agreed that BNPL should be recognized as a form of credit but emphasized that it should only be incorporated into credit scores if both positive and negative data are reported consistently. They expressed concern that some BNPL providers share only negative information, such as missed payments, while omitting on-time payment data that could strengthen credit histories. The representatives requested written responses detailing how FICO plans to ensure data completeness, accuracy, and fairness in its scoring model.
The representatives requested a response by December 3, 2025.
Commentary
The right approach to the regulation of consumer credit is a difficult issue. However, it is not infrequently the case that regulators and politicians who seek to do good or be protective of the poor end up adopting policies that discourage lending to those who need it. (See, e.g., Associations Urge Senators to Reject Nationwide Consumer Loan Rate Cap.)
There is some inherent irony in the fact that the U.S. regulators repeatedly criticized the limited availability of financial services to low-income individuals and simultaneously attacked those firms that are providing such services. Under the Biden Administration, the CFPB attacked Buy Now, Pay Later. (See CFPB Finds "Buy Now, Pay Later" Programs Pose Significant Risks to Consumers, despite the fact that "the report include[d] some good news about BNPL services, e.g., loan acceptance rates are up and profitability is down, (which suggests increased competition)." Now, Democratic representatives tout the great benefits of such products, particularly for low-income households.