Experian is to debut a buy now, pay later credit bureau this spring, providing US lenders with real-time data on customer spending and loan repayments without impacting credit scores.
The service is aimed at providing a distinct source of data relating to BNPL-only debt, reflecting its unique characteristics as opposed to traditional credit lines.
As a standalone entity, Experian hopes to provide a more nuanced overview of customer behaviour, and one that does not have a negative impact on consumer credit scores, often viewed as a major barrier to credit reporting by BNPL firms.
Currently, the lack of consumer insights on BNPL loans introduces risks and challenges for lenders during credit decisioning - including mispricing credit risk, inaccurately forecasting consumer capacity, and meeting compliance requirements related to undisclosed debt.
Experian says its upcoming Buy Now Pay Later Bureau will provide visibility into US-baased BNPL activity and deliver advanced analytics based on millions of BNPL credit records. The firm says it has partnered with some of the largest BNPL providers to draw on tradeline data and records.
Along with providing insigths into consumer's total debt across multiple providers, the data record will also provide a more informed view of customer repayment behaviours, providing lenders with the opportunity to serve thin-file customers who would have otherwise been denied credit.
“Our mission is to drive financial inclusion while ensuring responsible lending and we believe the reporting of BNPL payments plays a critical role in achieving this,” says Greg Wright, executive vice president and chief product officer for Experian Consumer Information Services. “At the same time, we are committed to giving BNPL providers the confidence they can report information to us without negatively impacting consumer credit scores. We are confident we have found a solution with The Buy Now Pay Later Bureau that will help protect consumer credit scores while bringing more transparency to the industry.”