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Does PayPal Credit Affect Your Credit Score?

Last updated 03/15/2024 by

Taylor Marks

Edited by

Fact checked by

Since the company does report to credit bureaus, PayPal Credit can affect your credit score. PayPal also has credit cards and credit lines available for people looking to build their credit without signing up for another credit card. As with most lenders, PayPal will conduct a hard pull, which will cost you a few points on your credit report. However, payments made on time can conversely increase your credit score and help you in the future.
Are you a loyal PayPal account holder or someone looking for a fast, safe checkout alternative at online stores? You may want to consider PayPal Credit. The online reusable credit line has no annual fee and doesn’t require you to open a checking account to get started.
So does this mean PayPal Credit works like other credit lines? Does PayPal report to the credit bureaus and affect your credit scores? Here’s everything you need to know about how PayPal Credit conducts account checks, if there will be a hard credit pull on your account, and how PayPal Credit can affect your credit score.

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How PayPal Credit works

PayPal Credit is a revolving credit line that works similarly to a credit card account, except that it can only be used in places where PayPal accounts are accepted. To be clear, the money used in PayPal Credit is completely separate from the funds in your PayPal account, as these funds are from your bank account or another credit card.
As with other lines of credit, PayPal will conduct a hard inquiry when you apply for the credit line, which will affect your credit score. If you meet PayPal Credit requirements (see PayPal’s Credit profile for details), you’ll receive a digital card rather than a mailed physical card. The minimum credit limit you can receive when opening your account is $250, but you may receive a higher limit based on your credit score.
Those looking to open a PayPal Credit account must be based in the U.S., pass a credit check done by PayPal, and be of legal age to own a credit card in the state you live.

Does PayPal Credit affect credit scores?

Though the company didn’t always report to the bureaus, PayPal Credit does report to the three major credit bureaus. Because of this, the credit line can affect your credit score both positively and negatively.
PayPal Credit can help build your credit history and score. However, there are other options, such as secured credit cards and credit builder loans builders, that can also help you improve your score.
Please note that if make late payments or use max out your available credit, you may find that your score will decrease. A debt collection agency may also be notified if there are outstanding balances, which will further damage your credit.
IMPORTANT! Remember that PayPal Credit affects your credit score. However, not all of PayPal services affect your credit. If you use PayPal as a money transfer service, then you won’t be building your credit score.

Are there any downsides to PayPal Credit?

As with most financial products, there are some downsides to PayPal Credit. First, the service charges a late payment fee if you miss a payment, which is added to your outstanding balance.
Second, if you aren’t approved for a credit line, you’ll still have a mark on your credit report, resulting in a lower score. Lastly, PayPal Credit comes with high interest rates but doesn’t offer reward points or other incentives for purchases. With this in mind, you may find that rewards credit cards offer better terms than PayPal Credit.
To get a better idea of how PayPal Credit stands up to other credit cards and rewards cards, compare your options using the tool below.

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Pro Tip

Though it’s important to keep the pros and cons of any financial tool in mind, remember that some of PayPal Credit’s downsides are true of other credit lines as well. Most credit lines and cards have higher interest rates than other financial products, and your credit report will still show hard credit pulls for loans, lines of credit, and credit card applications regardless of whether you were approved.

How PayPal Credit can affect your credit score

As with other credit cards and lines of credit, PayPal Credit can impact your credit in a few different ways.
  1. Applying for PayPal Credit. In order to get approved to use the PayPal Credit option, the company will have to perform a hard inquiry. The inquiry will temporarily lower your credit score by a few points.
  2. Increasing your credit limit. After three months of being a PayPal Credit customer, they may offer to increase your credit limit. If you have an increase in your credit limit without also increasing your spending, you will lower your credit utilization rate — which will typically improve your credit score.
  3. Missing a payment. Missed payments, especially over long periods of time, will drastically reduce credit scores. To avoid this, try to make any and all payments on time and avoid late fees.
  4. Closing your PayPal Credit account. If closing a PayPal Credit account, your credit score may lower due to the decrease in credit available across your accounts. Remember that just because an account is closed does not mean the debts are erased.

PayPal Credit on your credit report

Since PayPal didn’t always report to credit bureaus, you may not see a hard inquiry on your account if you used PayPal prior to 2018. When Synchrony Bank purchased PayPal Credit in 2018, the company began reporting to credit bureaus as Synchrony, so “SYNCB/PPC” may be what appears on your credit report.


Where does PayPal Credit work?

PayPal Credit is accepted anywhere PayPal is, including the online shops of Target, Best Buy, eBay, Apple, and Home Depot.

Does PayPal Credit affect a mortgage application?

PayPal Credit can impact a mortgage application since the credit line affects your credit score. If payments are not made on time, and the applicant’s credit score is lower than a lender would like, then you may not be approved for a mortgage loan.

Can PayPal Credit be used to send money?

Yes, you can use PayPal Credit to send money. All you need to do is change your payment method to PayPal Credit in your account or at checkout. Money sent in USD (U.S. Dollars) will be charged the same fee as when you use a credit or debit card to send money with PayPal.

How do you close a PayPal Credit account?

If you wish to cancel your account, contact PayPal Credit’s customer service team at (866) 528-3733.

Is PayPal Credit a bad idea?

The answer to whether choosing PayPal Credit is a good idea or not depends on your personal situation and what best fits your needs. For those who are prone to missing payments and having an outstanding balance on their accounts, it may be worth looking into a secured credit card or a prepaid credit card instead.

Key Takeaways

  • PayPal Credit reports to credit bureaus and affects your credit score both positively and negatively.
  • As with other credit lines, PayPal Credit will conduct a hard inquiry into your credit history when you sign up for an account. This will temporarily hurt your credit score.
  • Although there may be better options, such as a secured credit card, you can use PayPal Credit to help build your credit score.
  • If you don’t make timely payments or constantly carry a high balance, PayPal Credit can hurt your credit score as well.

SuperMoney may receive compensation from some or all of the companies featured, and the order of results are influenced by advertising bids, with exception for mortgage and home lending related products. Learn more

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