CORPUS CHRISTI, Texas — Buy now, pay later services like Klarna, Afterpay, and Affirm have exploded in popularity with over 86 million Americans using them. Until now, these purchases haven't shown up on credit reports, but that's about to change.
FICO's new scoring models will start incorporating this data, meaning those small installment payments could soon impact your credit score.
For some users like Carolina Cantu, that change is welcome.
"I honestly think that is a really good thing. I think this service is something that's helped a lot of people to get new clothes and I think that people shouldn't take it for advantage if they're not paying, so I think this is something that's a positive thing in my opinion," Cantu said.
According to Lending Tree, 41% of buy now, pay later users say they paid late on one of them in the past year, something Kristine Gonzales says worries her for young consumers.
"I think that's kind of predatory, just because a lot of the people that use these, by now pay later, sometimes are people that can't afford, you know, big chunks," Gonzales said.
And the demographic using these services the most? Nearly half of all users are under 36.
Dr. Jason Heavilin, a finance professor at Texas A&M University-Corpus Christi, explains why these services are so popular.
"I think the main driver that they were using these services, of course the financial need, but I mean that that versus credit card or loan, it was the ease of access," Heavilin said.
As the new FICO score rolls out this fall, Heavilin says the change will be a mixed bag, but mostly positive since it'll be a simple way to build credit.
"Some people will benefit, some people will get hurt. However, as a whole, in the aggregate, it will be a net benefit," Heavilin said.
This story was reported on-air by a journalist and has been converted to this platform with the assistance of AI. Our editorial team verifies all reporting on all platforms for fairness and accuracy.
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