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Affirm Partners with FICO to Enhance Credit Scoring for BNPL Loans

PaymentsDive | Caitlin Mullen | May 10, 2023

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Affirm, the buy now, pay later (BNPL) provider, is partnering with FICO to build a unique credit scoring model that incorporates BNPL loans into credit and lending decisions.

Three key takeaways:

  • Initiative to Improve BNPL Reporting: Affirm is the only BNPL provider that currently shares positive and negative loan information with credit reporting agencies. The company plans to enhance the credit scoring model in partnership with FICO to allow for better reporting and understanding of BNPL loans in the wider borrowing context.
    • This initiative aims to address the Consumer Financial Protection Bureau's concerns about the lack of information being provided in the BNPL space, ensuring these loans are reported to credit reporting agencies.

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  • Financial Performance: For the fiscal third quarter ending March 31, Affirm reported a loss of $205.7 million, a wider loss compared to the same quarter in the previous year, despite a 7% increase in revenue to $381 million. This loss is attributed to a $52 million rise in tech and data analytics spending, and a $35 million charge tied to employee layoffs in February.
  • Growth and Expansion: Affirm is actively pursuing international expansion, demonstrated by the purchase of U.K.-based BNPL firm Butter Holdings for about $15 million earlier this year. Despite challenging funding conditions, Affirm has increased its maximum annual percentage rate on interest-bearing loans from 30% to 36%. This move resulted in over half of the quarter's interest-bearing gross merchandise volume coming from merchants that adopted the higher limit.

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NCFA Jan 2018 resize - Affirm Partners with FICO to Enhance Credit Scoring for BNPL LoansThe National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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