Does PayPal Credit Affect Your Credit Score? Not if you pay on time


PayPal Credit is a convenient way to shop online from merchants who use PayPal. However, unlike PayPal credit cards, PayPal credit does not offer rewards.

How does PayPal credit work?

You can request a PayPal credit by completing a short online request form. You need to provide a few details like your date of birth, your after-tax income, and the last four digits of your social security number. You must also agree to the terms and conditions. Once approved, you will have a credit limit linked to your PayPal account almost immediately.

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If the item is less than $ 99, you will have six months to fully repay the amount without interest charges. However, if you do not repay within six months, interest will be charged on the purchase from the date of purchase at the purchase APR (annual percentage rate) applicable to your account. If the item’s price is over $ 99, the interest-free repayment period is reduced to four months. For new accounts, the variable purchase APR is 23.99% and varies by market based on the prime rate. There is also a late fee of $ 40.

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Does PayPal Credit Affect Your Credit Score?

When you apply for PayPal credit, you must be approved. For approval, PayPal performs a strict check, which reduces your credit score by a few points. However, if you want to increase your credit limit with PayPal credit, they do a gentle pull, which doesn’t impact your credit score.

PayPal has been reporting to the three major credit bureaus (Experian, TransUnion, and Equifax) since 2019. Making timely payments and paying off your debt can help improve your credit score. Any unpaid or past due debt on PayPal credit could hurt your score just like any other credit card. Indeed, if the balance remains unpaid long enough, it could be turned over to a collection agency.

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PayPal credit can be very useful if you can pay your bills on time, which will help you reduce interest charges. However, as with other lines of credit, if you fall back on your payments, the penalties and interest start to add up very quickly. This increases costs and damages your credit score.

There are many alternatives available including Affirm, Klarna, Splitit, and Sezzle. Some of the other key criteria to consider when considering PayPal credit alternatives should be customer service and security.


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