TransUnion Launches BNPL Credit Tool

TransUnion, BNPL, credit, credit score

In what it described as a move to promote financial inclusion for 100 million buy now, pay later (BNPL) users, TransUnion has launched a new suite of solutions designed to help these people get and establish credit.

“The inclusion of point-of-sale loans including BNPL into credit reports and other risk management tools can help tens of millions of consumers gain access to more credit opportunities and potentially secure better loan terms,” Liz Pagel, senior vice president and consumer lending business leader at TransUnion, said in a news release Thursday (Feb. 24).

Read more: Sezzle, TransUnion Focus on User Repayment History

Pagel said the credit bureau worked with BNPL lenders over the last three years to find a solution that won’t penalize consumers for frequent BNPL use.

Last year, TransUnion launched an extension of its partnership with BNPL platform Sezzle to allow users to establish and build credit based on their Sezzle repayment history.

Through the partnership, Sezzle users who qualify for Sezzle Up will have their repayment histories submitted to TransUnion, helping improve their financial status.

“The majority of our users are what we at Sezzle call ‘prime-to-be,’ people who may have been left behind — the underbanked and underserved,” Sezzle CEO Charlie Youakim said last year. “These are people who are most in need of a financial product that can spread payments out over time without incurring interest.”

TransUnion says the tool’s initial capability will let FICO and VantageScore, as well as other major financial institutions, FinTechs and lenders, have enough time to make sure they build future versions of their underwriting models so that they give consumers credit for good performance on point-of-sale products.

See also: Experian Launches World’s First BNPL Bureau

In the long term, TransUnion said it wants to include point-of-sale data on its core credit file where it can maximize the amount of credit decisions that it impacts.

“The industry needs time to adjust, and each lender will adopt the point-of-sale tradelines and attributes at its own pace,” Pagel said. “Maximizing the financial inclusion impact requires broad usage of this valuable data in more credit decisions.”

TransUnion’s new product comes a little more than a month after the credit bureau Experian announced its planned launch of the Buy Now Pay Later Bureau, designed to guard consumer credit scores and drive more inclusive and responsible lending.