Affirm: Agentic Credit Rewrites the Rules of Consumer Lending

For 60 years, the revolving credit line has been the default way Americans borrow. It wasn’t designed to be the best answer. It won because it was the only practical one. Underwriting was hard, data was thin, and lenders had to make one decision about a consumer and live with it for years. The revolving line was the workaround.

That workaround came with a specific business model. Revolving credit makes its money on the back end, through fees, interest and balances that linger. The total price is invisible at the moment of purchase, and the consumers who pay it most are often the ones who can least afford to.

Agentic credit changes the math. With real-time data, AI-driven decisioning and a phone in every consumer’s hand, lenders can now underwrite the transaction itself, at the point that a decision is being made, not a person in the abstract, but this purchase, at this price, today, against this person’s actual cash flow.

That shift is the spine of Karen Webster’s latest Monday Conversation with Libor Michalek, president of Affirm. For Affirm, it isn’t a pivot. It is the latest chapter of a mission the company has been writing since day one, to deliver honest financial products that improve lives.

“Having real-time data, real-time monitoring, where everyone has a computer in their hand, eCommerce, all of these things coming together,” Michalek told Webster, “have created the ecosystem where we are able to price credit in real time. Then we can offer it to consumers in a way that they actually understand as a part of the sticker price when they’re making a purchase.”

Repricing Risk, One Decision at a Time

Transaction-level underwriting is the mechanism. Repricing risk is the result.

When a lender evaluates a single purchase in context, looking at what the consumer is buying, what they already owe and what their cash flow looks like this month, risk stops being a static number attached to a person. It becomes a specific calculation tied to a specific decision. Purchases that would have been declined under a one-size-fits-all model can get approved. Others get repriced to reflect what the consumer can actually carry. And the consumer sees the math before they buy.

“We’re taking into account, based on the decisions that they are making, what that translates to on a per month obligation, and how does that relate to their cash flow, their existing debt,” Michalek said, “to be able to have a very specific answer to the transaction that’s in front of them at the moment.”

The practical effect is wider access on the front end and tighter discipline on the back end. Consumers who are invisible to a traditional FICO-anchored underwriter become visible to one that can read cash flow. Consumers who would be over-extended get told no, on the spot, before the damage is done. Michalek argues that both outcomes are better than what the old model could offer.

Why Installments Are Eating Revolving Credit’s Lunch

Banks and card issuers have noticed. Most of them now offer installment options bolted onto existing credit lines. Michalek argues those are the wrong shape for what consumers actually want.

“When they’re offering it on their traditional existing lines,” he said of the banks, “it’s an after-the-fact, almost a cleanup of something that the consumer did.”

Webster put it more plainly. “It is a very clunky solution post-purchase. You have to go searching for it… and it’s not intuitive.”

Pay-over-time products that appear at the moment of purchase don’t have that problem. Adoption now spans the full credit spectrum, from non-prime borrowers who need access to super-prime borrowers who could reach for a card and choose not to.

“It’s a recognition from the consumer that closed-ended, simple interest, no gotchas, what-you-see-is-what-you-get pricing is a better way to access credit than revolving credit,” Michalek said.

Predictability, in other words, is the product. Defined payments and known costs give consumers something a revolving balance never quite delivers, which is certainty about what they just signed up for.

A Different Business Model Comes Into View

Here is where the model breaks cleanly from the old one.

Revolving credit earns when balances stick around. Installment credit doesn’t. Once the loan is paid, the relationship resets, and the consumer keeps the dollars they would have spent on interest and fees.

“In the form of closed-ended credit, you’re ultimately giving that back to the consumer,” Michalek said. “There is more purchasing power for the consumer, there are more dollars in the bank for the customer to spend elsewhere.”

That changes who pays for credit and how. Merchants carry more of the cost, because better financing converts more sales and lifts average order value. Consumers see a transparent price and decide whether the purchase is worth it. And the lender has to be right about each transaction in front of it, not just right on average across a portfolio of revolving balances.

It is, in every sense, a higher bar. Agentic credit is what makes clearing it possible at scale.

Credit Disappears Into the Places People Already Shop

Distribution is moving in the same direction as underwriting. Credit is no longer a standalone product consumers go searching for. It is a feature embedded inside the commerce and payments environments where the decision to spend is already being made.

“We are focused on being a better provider of credit and being a better provider of payments to as wide of a range of consumers as possible across as many surfaces as possible,” Michalek said.

Online is where this has happened first and fastest. Offline is the open frontier, still under-penetrated, still mostly running on plastic. That gap is the headroom.

The Honest Finance Throughline

Transparency is what ties the pieces together. It also ties them back to Affirm’s founding pitch. When the full cost of a purchase shows up before the purchase, consumers make different decisions. Sometimes the decision is not to buy.

“We have millions of users every year who we show them what it’s going to cost them all in who decide not to make the purchase,” Michalek said.

That’s not a bug for Affirm. It’s the proof point. A credit business that earns money when a consumer walks away from a bad purchase is, structurally, on the consumer’s side.

Agentic credit makes that posture more powerful, not less. Underwriting at the transaction level, repricing risk in real time and surfacing the full cost upfront are not separate features. They’re a single business model organized around the idea that the most useful time to talk to a consumer about money is the moment they are about to spend it.

“The most impactful moment in time when you can communicate and interact with a customer about their finances is when they’re trying to make a purchase,” Michalek told Webster.

For Affirm, that’s been the thesis from the beginning. Agentic credit is what allows it to scale into the next era of consumer lending. And from their standpoint, to do it the honest finance way.