What is PayPal Credit?

One of the essential things you learn quickly over time is that your credit score plays a vital role in your creditworthiness. Your chances of applying for a loan, getting a new apartment, car, and even working for some

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We now live in the ‘buy now, pay later’ (BNPL) world. Thus, it is essential to critically look at the services being offered by different companies. One of such offers is the PayPal credit. 


Let’s explore everything there is to PayPal credit and if it impacts your credit score. 


PayPal credit, launched in 2016, is a revolving credit line that is available on millions of online stores that accept PayPal payments. Basically, you use PayPal credit to order and purchase any item online from a vendor that accepts PayPal. It is uniquely flexible and has almost the same security as PayPal. 


The usefulness of PayPal credit is that you can purchase items online and use the medium to transfer money. One demerit to PayPal credit is that you cannot use it to buy things from physical stores or malls. 


When you want to purchase an item from an online store, you will be redirected to the payment page that displays various payment options. If the store accepts PayPal as a payment option, you will select it. 


The fee will be deducted from your PayPal credit balance. PayPal credit allows you to pay for items below $99 with no interest on repayment for the next 6 months. If you spend more than $99, the time of grace is limited to 4 months. 


If the repayment isn’t made according to the applicable date, interest will be charged from the purchase date at the purchase annual percentage rate (APR) that applies to your account.


The valuable purchase APR is 23.99% for new accounts and will vary with the market based on the prime rate. As long as you repay within the agreed time limit, you will not pay for any interest. 


Like all credit lending agencies, you’d need to be registered and approved to access PayPal credit. The payment platform is partnered with Synchrony Bank, which will critically review your application for approval. After which, it will complete an audit. 


For this to be possible, a hard check will be carried out, and it will appear on your credit report. Hard checks or hard inquiries typically impact your credit score by several points. 


PayPal reports to Experian, Equifax, and TransUnion. On the off-chance you miss your repayment dates, PayPal sends that information to the credit bureaus, impacting your credit score. 


According to FICO, a hard check will cause your credit score to reduce by 5 points. If you have an impressive credit history, the deducted points will be less.


Before applying for a PayPal credit, there are some requirements you’re expected to have: 

  • Be over 18

  • A US/UK resident

  • Never gone through bankruptcy

  • A minimum credit score of 700 

PayPal, using its partner bank – Synchrony Bank – will vet your credit information, employment history, and income before you are approved for her credit. This often requires them to run hard checks on your credit information and impact your credit score. 


Approval for PayPal credit only takes a few moments. If your creditworthiness is impressive, you will be approved to enjoy the credit. If not, you will get a decline, and a hard inquiry will remain on your credit information.


So, if you want to apply for the credit, ensure that you meet the requirements first. You can get a free copy of your credit report from the Annual Credit Report.


When you apply for approval for a PayPal credit, it involves a hard inquiry. This means a couple of points will be knocked off your credit score. 


According to the Terms and Conditions on the platform, you cannot open multiple credit accounts with PayPal. Every purchase will be charged to your existing account.




Paypal can help improve your credit score over time, on time payments, and making sure to not have a balance over 30% of the credit limit report. 


PayPal Credit can be beneficial for paying your online bills, purchasing items, and conducting transactions online with ease. However, it involves a hard inquiry that impacts your credit score. Also, the consequences of late payments are dire, affecting your credit score. 


You have to consider all these factors before moving ahead to apply for PayPal credit. 

Here at The Phenix Group, we are concerned with helping you improve your credit score and your creditworthiness. We offer free credit consultation and design a foolproof strategy to improve your credit as part of our vision. 

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