Americans Rely Heavily on "Buy Now Pay Later" Services, But Miss Payments and Face Legal Exposure

A new LegalShield study reveals 76% of Americans rely on Buy Now, Pay Later (BNPL) services, with half (49%) having missed payments. Most BNPL users juggle multiple loans at once, often for everyday needs, creating a credit crunch and legal exposure. FICO will factor BNPL loans into credit scores this fall, potentially knocking down scores for those who have missed payments.

A new study by LegalShield reveals that 76% of Americans are utilizing Buy Now, Pay Later (BNPL) services, with nearly half (49%) reporting missed payments. The survey, conducted in August 2025 and covering 2,018 U.S. adults, highlights a growing reliance on BNPL for everyday expenses, including groceries and medical bills, with 67% of users managing multiple loans simultaneously [2].

The study finds that 62% of BNPL users have more than five open loans at once, with 47% using BNPL for groceries and 35% for medical bills. Luxury items remain popular, with 54% of users purchasing designer handbags and jewelry. However, the convenience of BNPL comes with potential risks, as 45% of users have faced legal or contractual disputes, with 62% reporting billing errors and 60% forced to pay even after returning items [2].

This reliance on BNPL services is set to have significant implications for credit scores, as FICO will begin factoring BNPL loans into its models this fall. The Fair Isaac Corporation (FICO) announced the introduction of FICO Score 10 BNPL and FICO Score 10 T BNPL in late June, aiming to help lenders evaluate creditworthiness for first-time borrowers. However, widespread adoption of these models is expected to be gradual, and their impact on credit decisions may not be felt by consumers for years [1].

Kevin King, vice president of credit risk for LexisNexis Risk Solutions, explains that the cost of implementing newer versions of FICO models and the reluctance of lenders to migrate from older versions contribute to the slow adoption rate. BNPL lenders may not furnish data to credit bureaus, further delaying the reflection of BNPL activity in credit scores [1].

Despite these challenges, FICO remains optimistic about the adoption of its new scoring models. The company has received numerous inquiries from lenders eager to test these scores and has ensured that they will be offered alongside existing models at no additional cost. This approach aims to facilitate a seamless transition and added value for lenders [1].

The study by LegalShield underscores the need for consumers to be aware of the potential legal and financial implications of BNPL usage. As BNPL becomes more prevalent, it is crucial for consumers to understand their rights and manage their BNPL loans responsibly to avoid legal disputes and potential damage to their credit scores [2].

References:
[1] https://www.digitaltransactions.net/it-could-be-years-before-bnpl-data-have-any-real-impact-on-lending-decisions/
[2] https://www.businesswire.com/news/home/20250909642814/en/New-LegalShield-Research-Warns-of-Buy-Now-Pay-Later-Credit-Crunch-3-in-4-Americans-Use-It-Half-Miss-Payments