The Consumer Financial Protection Bureau (CFPB) has released data highlighting that more than one-fifth of buy now pay later (BNPL) borrowers with a credit record used BNPL loans in 2022, with most of those consumers having subprime or deep subprime credit scores.
The CFPB research also revealed that more than three-fifths of BNPL borrowers held multiple simultaneous BNPL loans at some point during the year, and one-third had loans from multiple providers. BNPL borrowers were also more likely than other consumers to have higher balances on other unsecured credit lines such as credit cards.
Go deeper with GlobalData
Because lenders do not typically report BNPL loans to nationwide consumer reporting companies, data about BNPL use—especially about borrowers with multiple loans and on total consumer debt balances—is limited. The CFPB research aims to fill the data gap by pairing a matched sample of BNPL applications from six large firms with deidentified credit records.
To better understand the emerging BNPL market, the CFPB issued market monitoring orders in March 2023 to collect information from several companies offering no-interest, pay-in-four BNPL loans, including Affirm, Afterpay, Klarna, Paypal, Sezzle, and Zip. The CFPB matched the loan-level and deidentified consumer information it received with consumer credit records to study the prevalence of BNPL use.
CFPB BNPL data key takeaways
More than one-fifth of consumers used BNPL. About 20% of borrowers in 2022 were heavy users originating more than one BNPL loan on average each month, an increase from 18% in 2021. The average number of originations per borrower increased from 8.5 to 9.5.
Most BNPL borrowers took out multiple simultaneous BNPL loans. Specifically, approximately 63% of borrowers originated multiple simultaneous loans at some point during the year, and 33% took out loans from multiple BNPL lenders.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataNearly two-thirds of BNPL loans went to borrowers with lower credit scores. Among these applicants with subprime or deep subprime credit scores, BNPL lenders approved 78% of loans in 2022.
BNPL borrowers were more likely to hold higher balances on other credit accounts
These borrowers held higher balances of other unsecured consumer debt. These include personal loans, retail loans, student loans, credit cards, and subprime alternative financial services lenders. Before first-time BNPL use, consumers’ average credit card utilisation rates increased, suggesting that less available credit card liquidity may encourage consumers to use BNPL.
Younger borrowers held more BNPL debt as a percentage of their total consumer debt
Among borrowers aged 18-24, BNPL purchases made up 28% of total unsecured consumer debt compared to an average of 17% among borrowers of all age groups, during the months in which they borrowed.
