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does paypal affect your credit score
does paypal affect your credit score

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Does PayPal Affect Your Credit Score

Let's look at what PayPal Credit is and how it impacts your credit score.
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If you're a Paypal client you may have noticed that credit reports and credit scores are included in their terms of service. This is because PayPal Credit may leave a mark on your credit record and impact your credit score.

Let's look at what PayPal Credit is and how it impacts your credit score.

How does PayPal Credit work?

Your standard PayPal account is connected to PayPal Credit, formerly known as Bill Me Later, which you can use to extend the payment terms for some purchases.

The program is currently managed by Synchrony Bank.

PayPal Credit is a form of buy now pay later where you can repay your purchase in monthly instalments. You can get up to four months of zero interest for purchases of more than £99.

Thousands of merchants accept PayPal Credit and you'll receive payment reminders before each monthly payment is due.

There is no annual fee for PayPal Credit but you will be charged a late fee of up to £12.

To qualify for PayPal Credit you have to be a UK resident and it takes only a few minutes to apply. You can submit your application online.

PayPal Credit vs PayPal

PayPal Credit essentially allows you to spread the cost of purchases by taking credit, while a regular PayPal account works like any other money transfer service.

It uses money that is taken out of your bank or credit card account to make payments and purchases.

PayPal Credit vs Pay in 3

In many ways similar to PayPal Credit, with PayPal Pay in 3, you can divide your purchase into three equal instalments. The first instalment is due at the moment of purchase and the remaining two are due each month, on the same day.

Pay in 3 is a great way to spread out the expense of bigger purchases or to pay for emergencies, and it's a useful tool for better budget management.

Please keep in mind that Pay in 3 is a type of credit, so carefully examine your ability to pay back the debt and its potential effects on your credit score.

Can PayPal Credit affect your credit score?

Yes, PayPal Credit can show up on your credit report and have an impact on your credit score.

Whether it impacts your credit report negatively will depend on how you use your account. Similar to any other credit account, if you make timely payments, or at least ensure that your minimum payments are always on time, it may help to improve your credit score and help you build a good credit history.

On the other hand, if you are late with payments, or skip monthly installments, it can hurt your credit. This, in turn, will make it more difficult for you to obtain credit in the future.

Remember that even if you are approved for PayPal Credit, it can temporarily lower your credit score as applying requires a hard credit inquiry.

How does PayPal affect your credit score?

Applying for PayPal Credit

When you apply to join the program, PayPal Credit will perform a credit check. Even in the event that you are approved, PayPal will run a hard inquiry, which will appear on your credit record.

One hard check shouldn't substantially harm your credit rating, but it will temporarily lower your credit score by a few points.

Late payments

If you don't pay back what you borrowed from PayPal Credit, it could lower your credit score.

If you ignore your obligation for an extended period of time, PayPal may refer your case to a debt collecting company. The organisation will report the debt to the credit agencies, and a credit account will show up on your credit record, lowering your credit score.

Your PayPal Credit limit

Different situations may require PayPal Credit to do a hard or a soft credit check.

PayPal will perform a soft check if you ask for an increase in credit limits, leaving no trace on your credit report. After three months, PayPal may also make you an offer to boost your credit limit.

You'll lower your credit utilisation rate and raise your credit score if you raise your credit limit without raising your spending.

Closing your account

Because you'll have less credit available in your accounts, closing your account may temporarily lower your credit score if it causes your credit utilisation rate to rise.

If you close your PayPal account without paying the outstanding balance due, this will further harm your credit score.

Does PayPal Credit appear on your credit report?

Yes, PayPal submits information to the major credit bureaus, therefore your PayPal Credit account will probably appear on your credit record.

You might not be able to view details about your PayPal Credit account history prior to 2018. This is due to the fact that Synchrony Bank, a lender, acquired PayPal Credit in 2018 and started reporting its accounts to credit bureaus.

If your account is older than that, it might have previously been listed on your credit report under a different name or not at all.

Can PayPal improve my credit?

You might see an improvement in your credit score if you handle your PayPal Credit account well and make payments on time.

However, there are ways to quickly improve your credit - possibly faster than you would with your PayPal account.

Register to vote

If you add your name to the electoral roll you will let creditors know where you stay, and acts as identity verification. You can sign up for the electoral roll on Gov.uk.

Use a credit builder card

If you don't have any credit products, how would mortgage lenders or credit card companies know how you handle your debt? This is why getting a credit builder credit card and developing a credit history is one of the best ways to raise your credit score.

Reduce your credit applications

You leave a mark on your credit report each time you apply for credit.

For this reason, you should try and limit the number of loans you apply for as much as you can. Your credit score could be even further damaged if your application is rejected.


  • Similar to regular PayPal accounts, PayPal Credit allows you to use a credit line rather than your own money to make purchases.

  • The credit bureaus will receive information about your PayPal Credit account, which means it will appear on your credit report and have an impact on your credit score.

  • Synchrony Bank services PayPal Credit accounts, thus your account can be listed as "SYNCB/PPC" on your credit report.

  • Your payment history and credit utilisation rate are two factors that your PayPal Credit account can impact. Additionally, when you first apply, a hard inquiry will be done.


Can a negative PayPal balance lower your credit score?

Yes. Unpaid debt on your PayPal Credit account will hurt your credit score. If you leave your debt overdue long enough, it may be handed over to a debt collection agency.

Can a PayPal debit card affect your credit score?

No. A PayPal debit card won't affect your credit. Debit cards are funded by the money available in your bank account so they are not a form of credit.

Does closing a PayPal account hurt your credit?

It can negatively impact your credit if you close your PayPal account since PayPal reports to three credit reference agencies.

Does applying for PayPal Credit hurt my score?

Yes, applying for PayPal Credit will temporarily lower your credit as you give the bank permission to do a hard inquiry on your credit profile. 

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