FICO's BNPL Credit Shift: A New Era for Gen Z Credit Access and Fintech Lending Dominance

On June 23, 2025, FICO upended traditional credit scoring with its announcement of the FICO® Score 10 BNPL and FICO® Score 10 T BNPL—the first credit scores to incorporate Buy Now, Pay Later (BNPL) data. This move marks a seismic shift in how younger generations, particularly Gen Z and Millennials, will be assessed for creditworthiness. By redefining financial behavior assessment, FICO has not only expanded access to credit but also created a tailwind for fintech lenders and pressure on traditional banks to innovate. For investors, this is a clarion call to pivot toward diversified fintech platforms with strong BNPL portfolios.

The Creditworthiness Revolution for Gen Z/Millennials

Traditional credit scores have long relied on data from credit cards, mortgages, and loans—products many younger Americans haven't used. BNPL services, however, are deeply embedded in their financial lives. Over 10% of Gen Z and Millennials now use BNPL for purchases, often averaging small, manageable payments ($135 per loan). FICO's inclusion of BNPL data into its scores means these transactions will finally count toward building a credit history.

For millions of young borrowers, this is a game-changer. A FICO study with Affirm found that consumers with five or more BNPL loans saw stable or improved scores under the new model. This opens doors to mortgages, auto loans, or rentals that were previously closed. FICO's emphasis on a “broader financial behavior assessment” is no empty slogan: it's a structural shift to recognize the financial habits of a generation that's digitized its spending.

Fintech-Lender Partnerships: The New Gold Rush

The FICO announcement has already catalyzed partnerships between BNPL providers and traditional lenders. Take Affirm, which collaborated with FICO on the new scores. By sharing data on 500,000 borrowers, Affirm helped refine algorithms that aggregate BNPL loans to prevent “phantom debt” (obligations invisible to traditional scores). This synergy is a blueprint for the future: fintechs with clean BNPL data pipelines will partner with credit bureaus and banks to expand their reach.

Investors should watch for fintechs like Block's Afterpay, Klarna, or PayPal's Pay in 4 that are building robust BNPL ecosystems. Their ability to integrate with FICO's new scores positions them to capture a slice of the $500 billion+ BNPL market projected by 2030 (per analyst estimates). These companies are no longer niche—they're becoming critical nodes in the credit infrastructure.

Pressure on Traditional Banks to Innovate

While fintechs sprint ahead, traditional banks face a reckoning. For decades, their credit models excluded younger borrowers, who now represent a $1.2 trillion demographic spending power. With FICO's new scores, banks must adapt or risk losing a generation of customers. The good news for investors: some are already moving. Guild Mortgage, for instance, adopted FICO's trended credit data to broaden home financing access for first-time buyers.

But banks' reliance on legacy systems could slow their response. This creates an opportunity for investors to back fintechs that can plug gaps in traditional lending—such as real-time credit assessments or BNPL-driven underwriting tools. The race isn't just about BNPL; it's about who can redefine credit access fastest.

Investment Strategy: Diversify with BNPL-Driven Fintechs

The FICO-BNPL integration isn't just a technical update—it's a market-moving catalyst. Here's how to capitalize:

1. Target Pure-Play BNPL Fintechs: Companies like Afterpay (ASX:APT) and Klarna (privately held, but public via acquisitions) are direct beneficiaries. Their data-driven BNPL platforms are now critical to credit ecosystems.

2. Look for Fintechs with Credit Bureau Ties: Firms like Upstart (UPST), which partners with credit bureaus to assess non-traditional data, are well-positioned.

3. Monitor FICO's Own Growth: FICO's move could boost its stock as demand for advanced scoring tools rises. .

4. Avoid Banks Lagging in Digital Credit: Institutions slow to integrate BNPL data risk losing market share.

Risks and Considerations

Critics warn of pitfalls: BNPL's lack of credit checks could mask risks for vulnerable borrowers, and “loan stacking” (multiple BNPL loans) might inflate scores for those overextending. Regulators may step in, and adoption could lag if lenders hesitate. Still, the upside for fintechs that navigate these challenges is enormous.

Conclusion: The Credit Score is Dead. Long Live the Credit Score.

FICO's BNPL integration isn't just an update—it's a rebirth of credit scoring. For Gen Z and Millennials, it's a lifeline to financial inclusion. For investors, it's a roadmap to profit from the fintech-lending boom. The next decade will belong to companies that blend BNPL innovation with data-driven credit models.

The time to act is now. The future of credit is here—and it's BNPL-powered.