{"id":360022,"date":"2022-12-01T12:24:02","date_gmt":"2022-12-01T19:24:02","guid":{"rendered":"https:\/\/www.creditrepair.com\/blog\/?p=360022"},"modified":"2022-12-01T12:24:04","modified_gmt":"2022-12-01T19:24:04","slug":"does-paypal-affect-credit-score","status":"publish","type":"post","link":"https:\/\/www.creditrepair.com\/blog\/finance\/does-paypal-affect-credit-score\/","title":{"rendered":"Does PayPal affect your credit score?"},"content":{"rendered":"\n
\"Does<\/figure>\n\n\n\n

Disclosure regarding our editorial content standards<\/a>.<\/p>\n\n\n\n

PayPal does not affect your credit outright, though if you dig into their terms of service you may notice that they Using PayPal on its own won’t affect your credit score, but PayPal Credit reports financial information like missed payments or closed accounts to the three major credit bureaus, which can affect your score.\u00a0<\/p>\n\n\n\n

What is PayPal?<\/h2>\n\n\n\n

PayPal is a popular online payment tool with over 403 million users<\/a>. The good news for those who enjoy its ease of use: PayPal does not affect your credit score. This is because your credit does not get pulled when you make a payment using their platform\u2014in fact, PayPal doesn\u2019t share any of your financial information when you make a purchase using their tool.<\/p>\n\n\n\n

Much like Venmo<\/a> and other online purchasing tools, PayPal works by electronically and instantly wiring money from your bank account to the account of the seller you\u2019re purchasing from. This doesn\u2019t require a hard or soft credit check, just as buying groceries or making a rent payment doesn\u2019t require a credit check. <\/p>\n\n\n\n

PayPal\u2019s Pay in 4 method of installment payments, a form of \u201cbuy now, pay later”<\/a> financing, also does not require a credit check or appear on your credit report\u2014even if you\u2019re paying in installments using your credit card. There are only a few circumstances where you\u2019ll see PayPal on your credit report.<\/p>\n\n\n\n

Why do I see PayPal on my credit report?<\/h2>\n\n\n\n

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. Here\u2019s why.<\/p>\n\n\n\n

\"Why<\/figure>\n\n\n\n

You opened a Business or Premier account <\/h3>\n\n\n\n

Users who open a Business or Premier PayPal account give PayPal written authorization (in accordance with the Fair Credit Reporting Act<\/a>) to obtain their personal and\/or business credit reports from a credit reporting agency. In turn, this requires a credit inquiry<\/a> for PayPal to obtain those records, which is then reflected on your credit report. <\/p>\n\n\n\n

A single inquiry should not be significant enough to drop your credit score by more than a few points. 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.<\/p>\n\n\n\n

You requested a new product or account add-on<\/h3>\n\n\n\n

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\u2019re a reliable borrower. Whether this is a hard or soft credit check is determined by what you\u2019ve requested\u2014for instance, PayPal will perform a hard credit check on a request to open a PayPal Credit account. (But more on that later.)<\/p>\n\n\n\n

Your account is deemed risky<\/h3>\n\n\n\n

Any time PayPal believes there\u2019s 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. Risky behavior may mean an unusually high number of large purchases, purchases from a flagged account or repeated failed login attempts.<\/p>\n\n\n\n

PayPal Credit: how it works<\/h2>\n\n\n\n

Signing up for PayPal Credit is similar to applying for a new credit card. When you submit an application, it generates a full credit check to determine whether you’re a reliable borrower, causing a hard inquiry to show up on your credit report. The application is fairly straightforward, and the approval process only takes a few minutes. <\/p>\n\n\n\n

Once approved, PayPal Credit can be used anywhere that accepts PayPal as a form of payment. For purchases of $99 or more, you get six months of interest-free payments to pay off the balance. If you still have a balance after six months, interest starts to accrue going back to the initial purchase date. PayPal Credit can also be used for purchases less than $99, but the balance must be paid in full by the due date to avoid interest. <\/p>\n\n\n\n

Just like with a credit card, late payments can lead to additional fees. For instance, a late fee is charged each month if the minimum payment isn’t met. However, the late fee is never more than the minimum payment due. You can also earn rewards and a $0 annual fee by maintaining a good credit score. <\/p>\n\n\n\n

How PayPal Credit affects credit score <\/h3>\n\n\n\n

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. 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. <\/p>\n\n\n\n

As always, check your credit report and history to see if opening a new line of credit is a good idea for you.<\/p>\n\n\n\n

\"PayPal<\/figure>\n\n\n\n

Additional ways to be safe when using online payments <\/h2>\n\n\n\n

Even though PayPal may not affect your credit score, it’s still important to be vigilant when making payments using any form of online payment option. Here are some tips to keep in mind when sending or receiving mobile or online payments:<\/p>\n\n\n\n