Consumer Financial Protection Bureau wants buy now, pay later info on credit reports

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CFPB Buy Now, Pay Later Credit Reporting Overview: 

• Who: The Consumer Financial Protection Bureau wrote a blog post saying Buy Now, Pay Later companies should provide their borrowers’ information to nationwide consumer reporting companies such as Experian, Equifax, and TransUnion. 
• Why: The CFPB says not providing the information to credit reporting agencies prevents borrowers from being able to build their credit and from creditors knowing how much actual debt a prospective borrower may have. 
• Where: Buy Now, Pay Later is used nationwide as a way to purchase products. 

The Consumer Financial Protection Bureau has announced that it wants Buy Now, Pay Later (BNPL) companies to provide consumer reporting companies with the information of its borrowers. 

The CFPB said in a blog post last week that it believes the BNPL borrower information is relevant to and should be included in credit scores. 

“Until recently, few BNPL lenders furnished information about consumers to the nationwide consumer reporting companies (NCRCs). This lack of furnishing could have downstream effects on consumers and the credit reporting system,” the bureau said. 

BNPL has become an increasingly popular way to make purchases in recent years as it allows consumers to buy products in installments without interest. 

The CFPB says not reporting borrowers’ information to credit agencies hurts both consumers—who are unable to build their credit—and creditors who are not given a correct representation of how much debt a prospective borrower has. 

CFPB Says Both Negative, Positive BNPL Data Is ‘Important’

“The CFPB believes that when BNPL payments are furnished it is important that lenders furnish both positive and negative data,” the bureau said. 

The CFPB said consumer reporting companies should incorporate any BNPL data into core credit files “as soon as possible” and to ensure that it is “accurately reflected on consumer reports.” 

Equifax, Experian, and TransUnion—the three largest national consumer credit reporting companies—have all recently announced their plans to begin accepting BNPL payment data, the bureau said. 

The CFPB said it was concerned, however, that inconsistencies found within the credit reporting companies plans on what to do with the data will “limit the potential benefits of furnished BNPL data to consumers and the credit reporting system.” 

“These shortcomings can be resolved through the standardized approach for furnishing BNPL data,” the bureau said. 

In March, the CFPB issued a compliance bulletin to banks and financial service firms which warned them not to “manipulate” their online reviews. 

Have you used Buy Now, Pay Later to make a purchase? Let us know in the comments! 

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