Buy Now, Pay Later and Credit Reporting Companies: Senate Democrats Seek Details

A bloc of Democratic United States senators is pressing for clarity on how the three major credit bureaus handle data from buy now, pay later programs as this form of lending rapidly expands.

Senators’ Inquiry Into Credit Bureau Handling

The lawmakers said the industry lacks a uniform approach to buy now, pay later data, noting in May 4 letters sent to the chief executives of Equifax, Experian, and TransUnion that no standard method exists.

With buy now, pay later use soaring and households facing intense financial strain, these loans are becoming more central to consumers’ overall credit pictures, wrote Sens. Elizabeth Warren, Richard Blumenthal, Tammy Duckworth, and Mazie Hirono.

They released the letters on Wednesday and highlighted them in a same-day press statement, following information requests the same senators issued in November to seven pay-later providers about their operations.

The senators said all three credit reporting companies already receive some buy now, pay later data from at least one lender and may take in more as the segment grows, though the clearest, most widely described reporting arrangements to date involve Experian and TransUnion and tend to focus on installment-style pay-over-time products rather than short, interest-free pay-in-four plans.

The inquiry also touches on how pay-later firms screen applicants. Providers can rely on soft credit inquiries or alternative data for many pay-in-four approvals, while some longer-term or higher-ticket installment offerings may involve a hard inquiry more like a traditional loan. A hard inquiry is typically recorded on a consumer’s credit file and can affect lending decisions, while a soft inquiry is generally visible only to the consumer and does not affect scores.

Providers remain divided on reporting both interest-free pay-in-four plans and interest-bearing installment loans, a long-running dispute that leaves it unclear which pay-later data types, and how much, actually reach a credit report. Where reporting is happening, it is more often tied to longer-term installment products, which can be structured more like traditional loans and may be easier to fit into existing bureau categories than short, frequent pay-in-four transactions.

Whether missed payments affect credit can depend on whether a provider reports the account at all and, if it does, which events it furnishes. If delinquencies or defaults are reported and later used in scoring, they could weigh on a credit profile similarly to other late payments; if a provider does not report, missed payments may not show up directly on a report but can still lead to fees, account restrictions, or collection activity that could appear through other channels.

Buy Now, Pay Later Data Scarcity and Regulatory Context

The Consumer Financial Protection Bureau flagged limited buy now, pay later data last year as it evaluated consumer impact and potential rules for the sector. The agency explored oversight during the Biden administration, but those efforts were later rolled back under President Donald Trump.

The lawmakers criticized the opacity of United States credit reporting, saying secretive score models raise significant consumer protection concerns.

Consistent reporting standards are a prerequisite for credit files to reflect real repayment behavior and for consumers to understand what, if anything, a pay-later account will do to their broader credit profile.

They added that, until the industry aligns on how to use pay-later data, consumers remain stuck because information from only some lenders is shared with only some bureaus.

Industry Responses and Credit Score Implications

An Equifax spokesperson said Thursday the company believes buy now, pay later reporting can help people build stronger financial profiles and that responsible pay-later behavior should support access to other forms of credit. In practice, however, using pay later does not necessarily build credit today: it is most likely to help only when the provider reports repayment history to a bureau, the tradeline is placed in a lender-visible file, and scoring and underwriting systems are set up to use it.

More comprehensive reporting can also benefit lenders by improving risk assessment—helping them see existing pay-later obligations, reduce “stacking” across multiple providers, and manage portfolios with a fuller view of a borrower’s payment behavior.

TransUnion, in response to a request for comment, pointed to its own guidance and said pay-later information is visible only to the borrower at this time.

The Chicago-based bureau also noted that, in the future, pay-later data furnished to TransUnion may be used in credit decisions and could influence a credit score, but it has not set a public date for when such data would move from consumer visibility into broader lender-facing underwriting and scoring. Because Fico scores are calculated from the data contained in a consumer’s credit report, pay-later loans generally would not affect a Fico score unless they are reported in a way that is visible to lenders and incorporated into the scoring model; if and when that happens, on-time payments could add positive history while late payments could hurt, similar to other installment accounts.

Experian did not respond to an email seeking comment; the company is headquartered in Dublin with its North American base in Costa Mesa, California.

According to a December 2025 Consumer Financial Protection Bureau report based on data from Affirm, Afterpay (owned by Block), Klarna Group, PayPal Holdings, Sezzle, and Zip:

• 54 million Americans used buy now, pay later in 2023.
• Average buy now, pay later loan size: $135.
• Originations increased from 20 million (2019) to 336 million (2023).
• Average annual amount borrowed per user: $848 (2023), up 14% from 2022.

The bureau and consumer advocates have also focused on who is using pay later and how. Usage is frequently associated with younger adults and consumers managing cash-flow constraints, and repeat use—especially when multiple plans overlap—can make it harder to track due dates across merchants and providers. For households with tighter budgets, that can raise the risk that a missed payment triggers fees or other negative outcomes even when the underlying purchase amount is small.

The senators asked which pay-later providers furnish data and whether that information appears in consumer credit reports and scores. They also sought each bureau’s policies for incorporating pay-later data and the circumstances under which they would begin doing so.

They further requested details on any public or private studies measuring how including pay-later loans might affect the credit scores of users and asked the companies to respond by May 18.

Affirm says the situation remains a chicken-and-egg problem: credit scores cannot evaluate buy now, pay later accurately until reporting is consistent across all providers.

The company emphasizes interest-bearing installment products—71% of its portfolio in the first quarter of 2026—over traditional interest-free pay-in-four plans.

Penny Lee, chief executive of the Financial Technology Association, said credit bureaus are still refining their models and do not yet provide a complete view of buy now, pay later use.

Lee added that industry participants remain concerned about how accurately these systems capture pay-later activity. The Financial Technology Association represents four pay-later companies, including Klarna and Afterpay.

She said association members continue to work with the bureaus on studies and pilot programs to test how pay-later loans are evaluated and to ensure data furnished to bureaus is accurate.

The Consumer Financial Protection Bureau has examined how and whether pay-later firms report information to credit bureaus since at least 2021.

Sezzle chief executive Charlie Youakim said last month that the industry made reporting optional because many people are wary of credit and credit reporting, noting that credit card issuers are not legally required to report to bureaus.

He added that banks report because they believe doing so improves borrower repayment.

In October, American Fintech Council chief executive Phil Goldfeder argued that pay-later lenders should share payment information with credit bureaus and collaborate to properly incorporate short-term loan data; Affirm is a council member.

Goldfeder wrote that modernizing credit reporting to reflect buy now, pay later usage is long overdue.