PayPal launched back in 1998. Later in 2016, with the boom of e-commerce, it rolled out PayPal Credit. This offering works more like your regular credit card and can provide extra funding when shopping in stores that accept PayPal.
Users enjoy a 6-month payment window for all products under £99, without paying any interest. Items costing over £99 are payable in 4 months. Any settlement later than this welcomes a high APR of 19.9 percent.
Though PayPal doesn’t charge a yearly fee, you must go through underwriting to qualify. This is where credit scores come in. Paypal, unlike other lenders, does a hard credit pull which can impact your credit score.
PayPal Credit: What is it?
PayPal Credit offers easy access to credit when in need of extra money to shop online.
As soon as you add-to-cart and proceed to checkout, you spot the PayPal button, which allows you to checkout through your PayPal balance. Clicking this button leads to the PayPal Credit option, which then prompts you to fill an application form. The credit is instant upon approval.
Applying for PayPal funding welcomes a complete check of your credit history. A good credit score, around 700, is essential in qualifying for the credit.
This product functions more or less like a credit card. After receiving the lump sum, you must settle it off your PayPal balance over an agreed-upon period.
The initial 4 to 6 months are interests free. But after that, you pay a 19.9% interest on top of the minimum payments–which PayPal determines based on multiple factors (and is often £5 or 2% of the outstanding amount). Even worse, failure to settle the full amount on time welcomes a £12 penalty for delayed payment.
PayPal Credit Requirements
To qualify for PayPal funding, you must;
- Be 18 years old and living in the UK
- Have bankruptcy history
- Earn over £7,500 per annum
Lastly, you must have a desirable credit background to get PayPal credit.
How it Affects Your Credit Ratings
PayPal credit impacts your credit ratings because it invites a hard pull. The lender (PayPal) partners with Synchrony Bank, which underwrites your credit request and does a full audit. This hard pull remains on your report for two years and may reduce your credit score by some points.
As of 2019, PayPal Credit reports data to existing credit bureaus. As a result, any missed or delayed payments may also appear on your credit score.
Author Bio: Blair Thomas has been a music producer, bouncer, screenwriter and for over a decade has been the proud Co-Founder of eMerchantBroker, the highest-rated high risk merchant account processor in the country. He has climbed in the Himalayas, survived a hurricane, and lived on a gold mine in the Yukon. He currently calls Thailand his home with a lifetime collection of his favorite books.