Experian’s Industry-First Buy Now, Pay Later Bureau Will Protect Consumer Credit Scores and Provide Real-Time Insights to Drive More Inclusive and Responsible Lending

The Buy Now Pay Later Bureau™ from Experian will provide lenders with real-time reporting, scores and attributes

In a move to protect the financial health of consumers, Experian® announced its plan to bring more transparency to the rapidly growing buy now, pay later (BNPL) industry. In the spring of 2022, Experian will debut The Buy Now, Pay Later Bureau™, a first-of-its kind specialty bureau which will provide visibility so lenders can help further financial inclusion and better assess risk while preventing negative impact to consumer credit scores.

Many consumers enjoy the ease of access, flexibility and choice BNPL loans offer. In fact, 45 million Americans used BNPL products in 2021 and spending on BNPL has increased 230 percent since the start of 2020.

While Experian has worked with some of the largest BNPL providers since 2016, the majority of BNPL accounts are not reported to credit bureaus because today’s most commonly used score models are designed to predict risk based on payment behaviors of mainstream credit products, not BNPL accounts.

“Our mission is to drive financial inclusion while ensuring responsible lending and we believe the reporting of BNPL payments plays a critical role in achieving this,” said Greg Wright, executive vice president and chief product officer for Experian Consumer Information Services. “At the same time, we are committed to giving BNPL providers the confidence they can report information to us without negatively impacting consumer credit scores. We are confident we have found a solution with The Buy Now Pay Later Bureau that will help protect consumer credit scores while bringing more transparency to the industry.”

The Buy Now, Pay Later Bureau will provide a platform for fintechs, BNPL providers and point-of-sale lenders to furnish payment data on all types of BNPL products in a consumer-friendly manner to create a comprehensive view of consumer payments, including the number of outstanding BNPL loans, total BNPL loan amounts and BNPL payment status. To protect consumer credit scores from immediate negative impact, detailed information related to each BNPL transaction will be stored separately from Experian’s core credit bureau data.

Bringing more transparency to the financial services industry

Justifiable concerns about the negative impact to consumer credit scores has prevented many BNPL providers from reporting information. In turn, this has inhibited traditional lenders from gaining a complete view of a consumer’s financial obligations.

Experian’s one-of-a-kind specialty bureau will provide real-time reporting of consumer’s BNPL activity as well as Fair Credit Reporting Act (FCRA) regulated scores and attributes that BNPL providers and traditional lenders can use to make instant and accurate credit decisions. By gaining a more complete view of consumer’s BNPL repayment behaviors, lenders can provide thin-file or subprime consumers who would otherwise be denied credit with first or second chances.

Learn more at www.experianplc.com or visit our global content hub at our global news blog for the latest news and insights from the Group.

Source: Payments Journal