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Education

Equifax's internal research shows a basis for this optimism. One issue they've raised is that opening and closing
One study, based on anonymized BNPL data, showed that accounts within too short a timeframe can lower your credit
when active BNPL use was reported as revolving credit score, and that's unavoidable with BNPL plans. Providers
over a period of several months, consumers showed an will need assurances from Equifax that this won't be
average FICO score increase of 13 points. Consumers with counted against frequent (but reliable) BNPL customers.
a new or slim credit history showed more improvement, With BNPL programs from Visa and Mastercard poised
averaging a 21-point increase once BNPL payments were to take a significant role in the industry, the opinions of
factored in. Consumers with bad credit scores benefitted the card networks may also play a part in determining the
as well, also gaining an average of 13 points. future of Equifax's initiative.

This assumes the customer is making payments on time, As credit cards loosen their hold on consumers and
which isn't a given. According to a survey by Credit alternative forms of payment and lending continue to
Karma, 34 percent of BNPL users have missed at least one develop, it will be necessary for credit reporting firms
payment. This rate is even higher among millennials and to expand their coverage to provide more accurate
younger customers, more than half of whom have been assessments of a consumer's risk to lenders—they just
late paying back BNPL loans. This demographic is a target need to make sure they're evaluating the plans on their
market for BNPL providers and may see their credit scores own terms and not forcing them to fit outdated repayment
go down due to this change. models.

Negative consumer impacts simply reflect the fact that Srii Srinivasan is the CEO of Chargeback Gurus, a company she co-
by incorporating BNPL, Equifax will be generating more founded in 2014 that has grown to become a global leader in charge-
accurate scores that better reflect the consumer's risk of
non-repayment. However, BNPL providers aren't falling back management services. Srii holds a bachelor's degree in computer
in line yet. While Affirm, Afterpay and Klarna are talking science engineering from Annamalai University and is an active member
to Equifax about reporting options, they aren't reporting of the Electronic Transactions Association. Srii can be reached at win@
their pay-in-4 plans yet. chargebackgurus.com.