How does Block use AI and machine learning in credit decisions?
Block underwrites on its own data rather than on credit-bureau scores. Its FY2025 10-K says Cash App Borrow eligibility and terms come from proprietary underwriting models using customers' transaction history and near real-time Cash App data, informed by millions of historical repayment outcomes, and that in 2025 the average Borrow loan was repaid in less than four weeks. Those models sit behind Cash App Score, piloted with customers on November 19, 2025. Block says the technology approves 38% more Borrow customers at the same loss rate than traditional credit scoring, and that more than 70% of active Borrow customers have FICO scores below 580 yet maintain 97% repayment rates. Scale has grown since the FDIC approved Block's industrial bank, Square Financial Services, to offer Borrow on March 13, 2025: Borrow originated nearly $9 billion in 2024 through a partner bank and more than $27 billion over the following year, and consumer lending originations reached $18.9 billion in Q2 2026. Q1 2026 Borrow loss rates were 3.16% to 2.67% depending on customer tenure. In September 2026 Block said it would open Cash App Score to outside lenders through Nova Credit. American Banker reported in July 2026 that AI is not directly originating Borrow loans.[1][2][3][4][5][6][7][8]
Data as of Oct 19, 2026 · Block profile updated Oct 19, 2026 · 18 sources cited on this page · 52 fintechs profiled on this site · Markdown
What goes into Block's credit models, and what has it disclosed about them?
| Item | What Block discloses | Date |
|---|---|---|
| Borrow underwriting | Proprietary models using transaction history and other data in the Cash App ecosystem, informed by more than a decade of lending experience across Block and millions of historical repayment outcomes; Cash App Score introduced in 2025 for underwriting, credit limits, portfolio monitoring and product eligibility | February 26, 2026[1] |
| Cash App Score inputs | Paycheck deposits, spending, savings balance activity and repayment history, among other factors; calibrates in near real time and is shown to customers weekly | November 19, 2025[2] |
| Model features shown to investors | Examples included card decline rate over six months and mean stored balance over four weeks, translated into customer explanations such as advice to set up direct deposit | November 19, 2025[9] |
| AI in explanations | Block used its AI tools to translate model features into customer-friendly concepts and recommended actions | November 19, 2025[2] |
| Approval lift | 38% higher Cash App Borrow approval rate and 63% higher Square Loans approval rate at the same loss rates, from a 2025 study of 2021 to 2023 loans compared with traditional credit scores | November 19, 2025[9] |
| Customer-facing score | 80% of customers in testing reported taking at least one recommended action to improve their score; Block began showing the score to customers in May 2026 | May 7, 2026[6] |
| Not a bureau score | Cash App Score is not a traditional credit score, is not reported to credit bureaus and does not affect a customer's FICO score; Block published a macro sensitivity tool showing how Borrow originations and losses could move under recession scenarios | September 16, 2026[10] |
| Outside lenders | Cash App Score to be distributed through Nova Credit's Cash Flow Intelligence Platform, with customer consent; Block's analysis indicates potential to approve 30% more auto loans and 28% more credit card applications at comparable loss rates | September 1, 2026[7] |
| Role of generative AI | American Banker: "While AI is not directly originating Borrow's loans, AI does assist consumers in budgeting and spend management, the factors that go into eligibility for loans" | July 16, 2026[8] |
How much does Block lend, and how do the loans perform?
Block's own figures from filings, shareholder letters and releases. Loss rates are on different bases (cohort, product, portfolio) and are not one series.
| Metric | Value | Period |
|---|---|---|
| Cash App Borrow originations | Nearly $9 billion through an external bank partner; historic loss rates of less than 3% | 2024[3] |
| Borrow growth | $18 billion annualized, up 95% (Q2 2025); originations up 134% (Q3 2025), up 223% (Q4 2025), up 175% (Q1 2026) | 2025–2026[11][12][13][6] |
| Borrow since the FDIC approval | More than $27 billion originated over the past year; over 15 million Cash App actives have used Borrow | July 14, 2026[4] |
| Consumer lending originations (Borrow and BNPL) | $17.6 billion, up 82% (Q1 2026); $18.9 billion, up 59% (Q2 2026) | 2026[5] |
| Borrow cohort loss rates | 3.16% for 0–6 month customers, 3.01% for 7–12 months, 2.67% for 13+ months | Q1 2026[6] |
| Borrow repayment | More than 70% of active Borrow customers have FICO scores below 580 and maintain 97% repayment rates | November 19, 2025[2] |
| Afterpay and Square Loans | 96% of Afterpay installments paid on time; Square Loans loss rates under 3%, per a Block release reported by PYMNTS | January 20, 2026[14] |
| Square Loans since 2014 | More than 4.0 million loans and advances, more than $32.8 billion in principal | December 31, 2025[1] |
| Loan losses | Up $497.8 million, or 154%, in 2025, driven by loan volume growth, particularly Borrow (up 143%); loss rates remained stable | 2025[1] |
| Average loan duration | Cash App Borrow 21 days; Afterpay Pay-in-Four 27 days; Square Loans 154 days (last twelve months to September 2025) | November 19, 2025[9] |
What credit products do the models decide, and on what terms?
| Product | Terms and safeguards | Date |
|---|---|---|
| Cash App Borrow | Flat setup fee usually equal to 5% of the loan, per a Block spokesperson; average loan under $100 and about one month long at the time of the FDIC approval | March 2025[15][3] |
| Borrow safeguards | No rollovers, refinancing or compounding fees; customers who miss payments lose access until repaid; eligibility reassessed before each loan; controls can warn or pause repeat borrowers showing financial stress | July 14, 2026[4] |
| Afterpay Pay in 4 | Three or four installments, typically every two weeks, with no fees if paid on time; Block pays merchants up front and takes the non-payment risk | February 26, 2026[1] |
| Afterpay on Cash App Card | Flat 7.5% finance fee, six-week repayment, no revolving debt and no credit-score impact; underwritten with Cash App's real-time data | June 2, 2026[16] |
| Who borrows | Among Borrow customers using it for personal loans, 19% report household incomes below $30,000, 25% between $30,000 and $70,000 and 56% above $70,000 | July 14, 2026[4] |
Who supervises Block's lending, and what is not disclosed?
On March 13, 2025 the FDIC approved Square Financial Services, Block's Utah industrial bank, to offer Cash App Borrow; loans were previously originated by First Electronic Bank, and Payments Dive cited a TD Cowen note calling the approval "positive reinforcement from regulators".[3][15]
For pay-in-four BNPL, the CFPB told a federal court in March 2025 that it planned to revoke its interpretive rule classifying such loans as credit cards, American Banker reported; installment loans with four or fewer payments are exempt from the Truth in Lending Act and Regulation Z.[17]
The 10-K says Block relies on technology to assess repayment capability but "there can be no guarantee that such assessment processes will accurately predict repayments", and that Borrow and BNPL customers may be disproportionately affected by economic downturns.[1]
What is not disclosed: fair-lending or disparate-impact testing results for Cash App Score, independent validation of the 38% approval lift, how adverse-action reasons are produced from model features, and Borrow availability by state beyond the exclusion of Colorado and Iowa noted in November 2025.[2][9]
What does the Block profile record on this topic?
The rows below are the entries of the Block AI strategy profile that bear on this page, as of Oct 19, 2026; the profile holds the full record of 12 dated moves, 7 use cases and 14 sources.
| Use case | What the record shows | Status | Source |
|---|---|---|---|
| Machine-learning underwriting | Block names loan underwriting among the machine-learning problems it has solved at scale for over fifteen years; Cash App consumer lending originated $18.9 billion in Q2 2026, driven by Cash App Borrow. | In production | [5] |
| Date | Move | Detail | Source |
|---|---|---|---|
| Jan 16, 2025 | CFPB orders Cash App operator to pay up to $175 million | The CFPB found Block failed to take timely and effective measures against fraud on Cash App, directed defrauded users to their banks instead of fully investigating disputes, and for years offered no working phone support; the order requires up to $120 million in redress and a $55 million civil money penalty. | [18] |
How does Cash App decide Borrow eligibility?
With proprietary underwriting models that use a customer's Cash App transaction history and near real-time data, informed by millions of historical repayment outcomes, per Block's FY2025 10-K. Those models produce Cash App Score, which weighs paycheck deposits, spending, savings balances and repayment history and is reassessed before each new loan.
What is Cash App Score?
A score built from a customer's Cash App activity that informs access to Cash App Borrow. Block piloted showing it to customers on November 19, 2025. It is not reported to credit bureaus and does not affect FICO scores. In September 2026 Block said it would offer the score to outside lenders through Nova Credit, with customer consent.
How much does Cash App Borrow lend?
Borrow originated nearly $9 billion in 2024 through a partner bank and more than $27 billion in the year after the March 2025 FDIC approval, Block said in July 2026. Cash App consumer lending originations, which include Borrow and BNPL, were $18.9 billion in the second quarter of 2026, up 59%.
What are Cash App Borrow's loss rates?
Block's Q1 2026 letter gave Borrow risk loss rates of 3.16% for customers on the platform 0 to 6 months, 3.01% for 7 to 12 months and 2.67% for over 13 months. Block also says more than 70% of active Borrow customers have FICO scores below 580 and repay at 97% rates.
Does Block use generative AI to approve loans?
Block has not said so. Its credit decisions run on machine-learning underwriting models; Block says it used AI tools to turn model features into customer explanations for Cash App Score. American Banker reported in July 2026 that AI is not directly originating Borrow loans but helps customers with budgeting.
- Block, Inc. Annual Report 2025 (Form 10-K)
- Cash App Score Pilot Launches Utilizing Near Real-time Data
- Square Financial Services, Inc. Receives FDIC Approval to Offer Consumer Loan Product Cash App Borrow
- Inside Cash App Borrow: Expanding Access Through Responsible Lending
- Q2 2026 Shareholder Letter (Exhibit 99.1 to Form 8-K)
- Q1 2026 Shareholder Letter (Exhibit 99.1 to Form 8-K)
- Block Will Open Its Cash App Score to Lenders with Nova Credit's Cash Flow Intelligence Platform as Partner
- How Block's using its license to threaten traditional bank lending
- Block Investor Day 2025: Underwriting Strategy (presentation)
- Block's Juan Hernandez on Cash App Score, the Future of Credit and a New Lending Tool
- Q2 2025 Shareholder Letter (Exhibit 99.1 to Form 8-K)
- Q3 2025 Shareholder Letter (Exhibit 99.1 to Form 8-K)
- Q4 2025 Shareholder Letter (Exhibit 99.1 to Form 8-K)
- Block's Lending Tops $200 Billion Across Cash App, Afterpay and Square
- Block takes on payday lenders with Cash App
- As BNPL Goes Mainstream, Cash App and Afterpay Brings Pay-Over-Time to Every Purchase, Where Visa is Accepted
- CFPB retreats from classifying BNPL like credit cards
- CFPB Orders Operator of Cash App to Pay $175 Million and Fix Its Failures on Fraud
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