Liz Weston: How buy now, pay later loans could alter credit

How the bureaus will go about this is still a work in progress. Two of them, TransUnion and Experian, say that for now, the information won’t be included in regular credit reports, but lenders will be able to request it. The third bureau, Equifax, says it will incorporate the data into people’s credit reports.

But the leading credit scoring company, FICO, is still studying buy now, pay later data to see how well it predicts how people might handle other credit. There’s not even agreement among the bureaus yet about whether the loans should be treated as revolving debt, like credit cards, or as installment loans, which typically last much longer.

“It’s such an important question because how it’s reported makes a definite difference in how it will impact the score,” says Ethan Dornhelm, FICO’s vice president of scores and predictive analytics.

HOW YOU CAN BUILD BETTER CREDIT NOW

If you’re currently trying to build or rebuild credit, you probably don’t want to wait around for these details to get sorted out.

Consider asking someone responsible with credit to add you as an authorized user to their credit card. Other options include a credit-builder loan or a secured credit card from a lender that reports to all three bureaus.