TransUnion introduces new BNPL tools for consumers to build and improve credit

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Time and again, credit-rating agencies have argued that reporting on-time buy now pay later (BNPL) repayments can help shoppers build a better credit history. TransUnion, in what it has described as a move to promote financial inclusion for nearly 100 million adult users of BNPL, has launched a suite of tools designed to help these consumers get and establish credit in February 2022.

The move from TransUnion will also help financial institutions to access valuable insights generated when consumers take and repay the credit from BNPL providers. PayNXT360 expects the point-of-sale suite of solutions to most likely benefit the consumers who are in need of tools that can help in building and improving credit. According to TransUnion, nearly 9% of the point-of-sale applicants have three or fewer trades reported. PayNXT360 expects Gen Z and millennial consumers to benefit from the launch of new credit tools as people using the BNPL products tend to skew younger.

Moreover, the inclusion of BNPL point-of-sale loans into the credit report is expected to help tens of millions of BNPL adopters to get more credit access opportunities and potentially even get better credit terms in the future. On the other hand, users of credit data from TransUnion can also opt-in to receiving these trade lines as an extension of their existing credit data delivery. Over the next four to eight quarters, as the industry works to improve scoring models using BNPL data, it is expected that most lenders will adopt the use of this information along with their existing models to further boost their lending capabilities.

BNPL is helping consumers globally to access short-term credit for completing their offline and online purchases, especially at a time when prices of products are increasing rapidly. PayNXT360 expects BNPL to help consumers who do not have traditional credit records to build better credit scores in the future, thereby helping in driving broader financial inclusion over the next four to eight quarters.

To know more and gain a deeper understanding of the BNPL market in the United States, click here.