Does PayPal Credit Affect Credit Score?

Credit Score is a number you need to keep in check for many reasons – to get a loan, to rent a place, or buy a roof over your head. But, as a user of online payment services, you might be wondering does PayPal Credit affect your credit score. So let me analyze and answer this question.

PayPal Credit affects your credit score, as this payment platform reports to the credit bureaus. Any late payment will be reported specifically to Experian. Although this payment platform used to be considered a “hidden tradeline” because it did not report activities, it changed the policy at the end of 2019.

Credit report with a pen on top

No matter whether you are considering getting a loan or not, you should always aim to improve your credit score. It’s also not a bad idea to consult a financial advisor on this topic, as they could help you stay on track.

Does PayPal Credit Affect Credit Score?

You may believe that taking credit from an online payment platform such as PayPal is an easy and straightforward process, but before you venture into this loan, there are a few things to bear in mind. First of all, if you want to keep your credit score unaffected, you should know that even the application process with PayPal will affect your report.

Secondly, since 2019, PayPal regularly makes reports for the credit bureaus. In reality, this means that any missed or late payment for what you owe to the company will be reported to the credit agencies. It will also probably be noted on your report and have an instant impact on your score.

The Bank Will Run a Hard Pull On Your History

Due to the fact that this platform collaborates with a bank, they will audit and evaluate your application. This means that the bank in question will run a so-called hard check, which will in return be kept in your report for the following two years. This check can result in a few points being reduced from your overall score. Every time you apply for a car loan or some similar financial injection, the financial institution will run such a check. So be wary of your credit report, because it will be affected every time.

 Two men speaking over a pile of papers

Will PayPal Credit Help Improve Stats on My Report?

If you want to work on improving your credit score by making regular payments and being financially responsible and disciplined, you are probably aware that some loans can help you on this mission. If you pay your installments on time and don’t miss them, most loans will help you improve your score significantly and become eligible for other types of financial support.

However, this is not the case with PayPal Credit. Although missing payments will negatively affect the score, as is the case with the application itself, paying what you owe to PayPal on time won’t help you improve either.

What Else Can Affect My Credit Score Negatively After I Make a PayPal Account?

When you start considering opening an account with PayPal, you probably already have a few things on your mind. But first and foremost, although you can’t have an account on this platform if you’re under 18, it’s a perfect solution for money transfers and online shopping. But keep these things in mind:

  • Opening an account on this platform alone won’t affect your score in any way.
  • If you choose to have a Balance account, you will be automatically given a Debit card. This type of card can not hurt or affect your score in any way.
  • If you happen to have a negative balance on your account, it will be considered unpaid debt or past due and will hurt your score.
  • This platform reports to all three bureaus, so if you choose to close your account, it will also negatively affect your score.
  • If you already have PayPal Credit and you wish to increase your limit, this platform will conduct a soft pull. Overall, it won’t hurt your credit score.
  • If you are interested in their Working Credit, you should know that it doesn’t report to any bureau so it won’t impact your score in any way.
A phone with a PayPal app

How to Effectively Build Your Report

Are you trying to build your credit score and improve your chances of getting a large loan? If so, you should stay away from any type of loan offered by PayPal, as it not only hurts your score when you miss payments or even apply but it also isn’t helpful in improving the report. The table below offers some advice on building the score effectively.

What to doHow it affects the scoreAdditional benefits
Enroll in the voting systemNot only will it allow you to vote, but it also lets credit bureaus know of your address.It will be used as a verification step to help avoid identity fraud.
Use a credit card designed for building the scoreA credit card for people with no credit history will help you build a good one.With these special cards, the limit will be lower but the APR is higher.
Erase any issues on your reportAll three credit bureaus have a lot of data about your credit history and it affects any applications.If you check your report regularly and contact the bureaus to fix the issues, you won’t have trouble applying.
Lower the number of applicationsEach time you send an application for a loan, you leave a footprint in the report.Try to stay away from applying or use free online tools to check whether you can get approved.

Be Careful When Applying for Any Type of Credit

PayPal Credit can be a great solution if you want to have more money to work with when purchasing through the internet. If you are regular with your payments, it won’t leave such a huge impact on your credit score. Just remember to keep it within healthy usage. However, since applying for this loan will immediately leave a trace and negatively impact your score, you should be mindful. Even if you are using an online tool to calculate your possibilities, you should make careful and informed decisions.