CFPB Addresses Credit Reporting in Buy Now, Pay Later Market

In a blog post released June 15, the Consumer Financial Protection Bureau (CFPB) continued to show its interest in credit reporting by Buy Now, Pay Later (BNPL) lenders. Recognizing the importance of credit reporting to consumers building credit profiles through payment of BNPL obligations, the CFPB encouraged BNPL lenders to report both positive and negative information and consumer reporting agencies (CRAs) to expeditiously develop uniform reporting standards so that the data can be included in core credit files as soon as possible.

The new blog post follows up on the CFPB’s December 2021 market monitoring inquiry into BNPL, which was followed by orders to five companies offering BNPL products. The orders sought information and data on key areas of consumer impact, including data furnished by BNPL firms to CRAs for inclusion in credit reports. For more information about the CFPB’s inquiry, please see our post covering the inquiry and subsequent orders here.

In the new statement, the CFPB noted the potential negative effects on consumers and the credit reporting system if information regarding timely payments made by BNPL borrowers is not incorporated into their credit reports and credit scores. The CFPB acknowledged plans by the three largest nationwide CRAs to accept BNPL data, but it expressed concern that inconsistent treatment will limit the potential benefits of the furnished data to consumers and the credit reporting system. The CFPB described its preference for a standardized approach for furnishing BNPL data that would ensure the consistency and accuracy of the BNPL payment information. The CFPB further recommended that CRAs should incorporate the BNPL data into core credit files as soon as possible and ensure that the data is accurately reflected on consumer reports.

The CFPB will continue to monitor the progress of BNPL lenders, CRAs, and credit scoring companies as the BNPL market grows and BNPL lenders furnish information about repayment.