Does Using PayPal Affect Your Credit Score?
You use PayPal to split dinner, buy things off Depop, or pay for stuff without pulling out your card. But if you're trying to build credit, you might be wondering: does using PayPal affect your credit score?
Let’s clear up the confusion—because the answer depends on how you use PayPal.
What Is PayPal and How Do People Use It?
PayPal is a digital wallet that lets you send and receive money, shop online, or pay with your bank account or debit card. For most people, it’s just a faster, easier way to check out.
Here’s the thing: basic PayPal usage is not a credit-building tool. If you’re just sending money to friends, using it to pay at checkout, or withdrawing to your bank, that activity isn’t reported to credit bureaus.
But PayPal does offer some credit products—and those can impact your score.
Does PayPal Affect Your Credit Score?
In most cases: no. Just using PayPal to pay with your debit card or bank account has zero impact on your credit score.
That means:
Transferring money to friends? Won’t affect your score.
Using PayPal to buy things online? Doesn’t touch your credit.
Withdrawing money from PayPal to your bank? Still no effect.
So if that’s all you use it for, it won’t help or hurt your credit score—you're simply outside the credit reporting system at that point.
When Can PayPal Actually Affect Your Credit Score?
Does PayPal Credit Affect Credit Score?
Yes. PayPal Credit is a revolving line of credit (similar to a credit card), and it does get reported to the credit bureaus. If you're wondering how do credit scores work, your payment history and credit utilization are two of the biggest factors that affect your score.:
Your payment history and credit utilization matter
Missed payments can hurt your score
Responsible use can help build your credit
FYI: PayPal Credit is issued by Synchrony Bank, which reports your account activity just like any other lender would.
Does Applying for PayPal Credit Affect Score?
Yes—applying for PayPal Credit, like all traditional credit cards, triggers a hard inquiry, which may slightly lower your credit score for a short period. So if you’ve Googled "does applying for PayPal Credit affect score?" the answer is yes, but the impact is minimal and temporary.
A hard inquiry:
Appears on your credit report
Can lower your score by a few points
Stays visible for about 2 years
Can Missing PayPal Payment Affect Your Credit Score?
Absolutely. If you miss payments on PayPal Credit, or don’t repay what you owe on time, it can be sent to collections—and that can seriously damage your credit.
Once something goes to collections, it stays on your report for up to 7 years. That’s a long time to deal with the consequences.
Does PayPal Monthly / Pay Later Affect Credit Score?
PayPal offers two other products:
Pay in 4: Pay over 6 weeks, no interest
Pay Monthly: Pay over 6 to 24 months with interest
So, does PayPal Pay Later affect credit score? Not always.
Here’s how it works:
Pay in 4 triggers a soft credit check (no score drop)
Pay Monthly triggers a hard pull and reports to credit bureaus
If you make your payments on time, Pay Monthly can help build credit. Miss payments, though, and it could ding your score just like a traditional loan.
Does PayPal Do a Credit Check for Pay in 4?
Nope. Pay in 4 uses a soft credit inquiry. That means it reviews your credit background but doesn’t lower your score or show up as an application.
This is great if you want flexible payments without the pressure of opening a new credit line.
Does PayPal Credit Affect a Mortgage Application?
It might. Here’s why:
When applying for a mortgage, lenders look at:
Your credit score
Your credit mix (types of accounts)
Your debt-to-income (DTI) ratio
Because PayPal Credit functions like a credit card, it factors into your report. High balances or late payments can raise your DTI or lower your score—both of which could impact your chances of qualifying.
It doesn’t automatically hurt you, but it’s something lenders will consider.
How Long Does Using PayPal Affect Your Credit Score?
This applies only to PayPal Credit and Pay Later.
Here’s what to know:
On-time payments help your score over time
Missed payments or collections stick for up to 7 years
Hard inquiries stay on your report for about 2 years
The impact depends on how you manage your account.
Credit Score for PayPal Credit — What Do You Need?
There’s no fixed number, but generally you’ll want a score of 640 or higher to qualify.
Some users may see a soft pull pre-qualification offer, but a hard pull is required for final approval.
If your score isn’t there yet, you might want to start with a secured credit card to build credit
How to Check Your Credit Score — Inside or Outside PayPal
Wondering how to see my credit score in PayPal?
Here’s what you can do:
If you have PayPal Credit, there may be a basic dashboard view
For a full picture, check with major credit bureaus or apps
A credit building app like Step can help you track and grow your score in one place
Final Thoughts — Should You Worry About PayPal and Your Credit Score?
Here’s the bottom line:
Using PayPal to pay or send money? Won’t affect your credit
Using PayPal Credit or Pay Monthly? Yes, it can help or hurt—just like a credit card
Using Pay in 4? No score impact, thanks to soft inquiry only
So if you're just using PayPal for regular transactions, you're in the clear. But if you sign up for credit-based products, treat them like any other credit account: use responsibly, pay on time, and monitor your credit.
Want to level up your credit game? Start with our secured credit card or check out a credit building app designed for Gen Z.
