This means that if you miss a payment or pay late, your credit will take a hit just like if you missed a credit card payment.Īs always, check your credit report and history to see if opening a new line of credit is a good idea for you. PayPal Credit affects your credit score in that it acts like a regular credit card, but is only able to be used with merchants that accept PayPal. If you use PayPal Credit to send money to a friend, you’ll need to also pay the amount owed in full by the due date to avoid interest fees. With payments of $99 or less, you’ll need to pay for it in full to avoid paying interest. For purchases that cost more than $99, you’ll have six months to pay it off without interest. Once approved, you can use PayPal Credit most anywhere that accepts PayPal. The approval process for PayPal Credit takes only a few moments. Considering this is a new line of credit for you, PayPal will do a hard credit check on you to see whether or not you’re a reliable borrower-which is reflected in your credit score. You have to apply for PayPal Credit much in the same way you have to apply for a credit card. Read on to learn more about how PayPal Credit affects your credit score. If your application for PayPal Credit is approved, you can then use PayPal Credit as a payment option for websites and retailers that offer payments through PayPal. PayPal Credit is a program that gives PayPal users extra time to pay off a purchase made through PayPal with a revolving line of credit, based on creditworthiness. While PayPal by itself does not affect credit, it has a branch known as PayPal Credit that does have a direct impact on your credit score. Risky behavior may mean an unusually high number of large purchases, purchases from a flagged account or repeated failed login attempts. (But more on that later.) Your account is deemed riskyĪny time PayPal believes there’s an increased level of risk associated with your Premier or Business PayPal account, they may perform a credit check to verify the account is actually being used by you. Whether this is a hard or soft credit check is determined by what you’ve requested-for instance, PayPal will perform a hard credit check on a request to open a PayPal Credit account. When users request new products or add-ons to their account, such as a PayPal debit card or PayPal Credit, PayPal will perform a credit check to ensure you’re a reliable borrower. You requested a new product or account add-on This inquiry is only performed for those who want to upgrade their PayPal account to a Business or Premier account, so the average user will likely not have to worry about PayPal performing a credit inquiry on them. In turn, this requires a credit inquiry for PayPal to obtain those records, which is then reflected on your credit report.Ī single inquiry should not be significant enough to drop your credit score by more than a few points. Users who open a Business or Premier PayPal account give PayPal written authorization (in accordance with the Fair Credit Reporting Act) to obtain their personal and/or business credit reports from a credit reporting agency. Though PayPal does not outright affect your credit score, there are some mentions of credit in their terms of service, and some users may see PayPal reflected on their credit report. There are only a few circumstances where you’ll see PayPal on your credit report. PayPal’s Pay in 4 method of installment payments, a form of “buy now, pay later” financing, also does not require a credit check or appear on your credit report-even if you’re paying in installments using your credit card. This doesn’t require a hard or soft credit check, just as buying groceries or making a rent payment doesn’t require a credit check. Much like Venmo and other online purchasing tools, PayPal works by electronically and instantly wiring money from your bank account to the account of the seller you’re purchasing from. This is because your credit does not get pulled when you make a payment using their platform-in fact, PayPal doesn’t share any of your financial information when you make a purchase using their tool. The good news for those who enjoy its ease of use: PayPal does not affect your credit score. PayPal is a popular online payment tool with over 403 million users. To be a smart consumer and know more about the platforms you’re using, you should know what PayPal does with your credit information. PayPal does not affect your credit outright, though if you dig into their terms of service you may notice that they mention credit scores and reports. Additional ways to be safe when using online payments
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