Does PayPal Credit Affect Credit Score?

‘Does PayPal credit affect credit score or not?’ is the new talk of the town, and many people are curious to know about it as a majority are using PayPal Credits heftily to make their purchases. The reviews and the answers to this question are mixed, and people who still don’t affirm the question don’t know about the changes PayPal Credit made a while back. 

So if you ask us, ‘Does PayPal credit affect credit score?’ Our answer will be a big ‘Yes.’ PayPal started as a ‘hidden tradeline’ which means it never shared the financial information you ever had. At the same time, you make your purchases using the PayPal Credit services. 

However, it has changed from late 2019. The PayPal Credit services send your credit reports to the Credit Bureaus agencies, TransUnion, Experian, and Equifax. As a result, they affect your primary credit score history. Additionally, it reports to Experian about all the late payments you have ever made. 

If you have not applied for the PayPal Credit and are thinking about applying for it, think about it twice. If you still want to apply for it, focus on building your credit score first and then apply for it. Otherwise, the lash back will hit you hard if your application gets denied

It will not only conduct an inquiry but lower your overall credit score for at least 12 months. Try sitting with a professional to improve your credit scores, and the results will be worth having in the long run. 

Why is it necessary? You may ask because we are ensuring that a low credit score may not become the factor that leaves a footmark on your future loans or mortgages. It is equally possible that you are thinking ‘been there done that as you read what we are telling you to ensure that these PayPal services bring all the hard work of building and maintaining a good credit score to nothing.   

According to some unknown resources, it is reported that to get your PayPal Credit request accepted, you are required to have about 700 credit scores. Even though PayPal Credit might sound like a good and innocuous alternative for your credit needs, it’s still unnecessary. 

We think it is important for one to be aware of how PayPal Credit can impact the ability to take out the credits for future loans. Because yes, PayPal Credit does affect your credit score. 

Let’s dig a bit deeper into this problem.

Defining What PayPal Credit Is

PayPal Credit, a service most similar to any other credit card service, was launched in 2016. Since then it has made its presence known as a convenient payment method, especially in the online market. You get to buy anything and everything with PayPal credit from where PayPal is accepted. 

The conditions of repayments follow; if a product costs less than $100, you get 6 months to pay its installments without any interest rate; however, if the product costs you more than $100, the repayment time is reduced to 4 months. 

Anything paid after the period, as mentioned earlier, includes a hefty amount of 19.9% interest rate (APR) on it. However, PayPal credit doesn’t charge you any annual fees. You are still required to be approved as you apply for it. It is where the PayPal Credit hits you hard; it calls an inquiry over you and lowers your credit score. 

PayPal Credits’ isn’t anything like the other websites that compare and run a soft check on your credit scores. On the contrary, it runs a full-blown hard check and leaves its footmarks deep in your credit reports. Now let’s boil it down to how PayPal Credit works. Should we begin and later discuss its benefits and drawbacks? 

A Brief Intro To How PayPal Credit Works?

PayPal Credit has no such mambo jumbo to sign up with it. It is very straightforward to sign up, and you can start using it instantly. While you’re making your product purchase, you will find the usual PayPal button. It means you can make your purchase using your regular balance. 

Once you click on the button, a PayPal Credit tab will pop up. From here, you complete filing your request. Once and if it gets approved, you will receive the balance the same day. Applying through an application means your credit score will get scrutinized. And as we already have mentioned before, this scrutiny will leave its imprint on your score report

Luckily if your applications get the approval, you will be free to shop wherever you want to shop from that accepts the PayPal credit. But be careful. You need to repay your outstanding balance within a certain period, and once it’s up, you will be charged a 19.9% interest rate. 

The least payable amount is around 2% of the outstanding balance or $5. But when you fail to repay it on time, you are charged $12 as a late fee.  

Since we have answered how it works, you might be considering what requirements it needs for a smooth process of applying for it. 

What Are The Requirements To Apply For PayPal Credit

The requirements for submitting a PayPal credit are fairly simple or rather a piece of cake if you practice good credit habits. So to apply to PayPal Credit, all you need to meet are the following requirements;

  • You must be 18 years old or more.
  • You must be a citizen of a PayPal authorized country.
  • You must not have a history of bankruptcy.
  • You must have at least $7,500 annual income.
  • You must have a fairly good credit score history, preferably a 700 or more credit score. 

Now let’s look at a few benefits and drawbacks of PayPal Credit,

What Are The Benefits And Drawbacks Of PayPal Credit


  • You can shop at places where the PayPal payment gateway is accepted.
  • You get $0 annual fees if you have an excellent credit score.
  • You get $10 reward points.


  • You will spend 30x more than the other credit cards users.
  • Your credit score report through a hard pull that can leave a negative impact on it.
  • Missing out on any payments will also put a temporary mark on the credit score report.
  • The interest rate once the repayment time is up is 19.9% 


PayPal Credit does provide you protection against fraudulent and unauthorized purchases. So you don’t have to worry about that at all. However, considering the question Does PayPal Affect Credit Score is no longer a mystery for you, hopefully. We would recommend applying for it when you want to. Otherwise, it would be a hassle for you and impact your score reports when you apply for a business or a personal loan.

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