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PayPal is a personal financial app that allows individuals to make and receive payments quickly and easily. PayPal has emerged as one of the most popular platforms for electronic payments in recent years. It is convenient and accessible, and works with most forms of payment. PayPal also offers PayPal Credit, which allows users to open a reusable credit line connected to their PayPal account.
PayPal Credit works similarly to most other credit cards. The primary difference is that a PayPal Credit account is attached to your PayPal account, rather than a bank account. PayPal Credit also does not require a physical card, but uses a digital card instead. However, PayPal users can sign up for a PayPal Mastercard, which is a physical debit card.
Anyone with a PayPal account can apply to open a PayPal Credit account. Users with a good credit score (700+) usually have no trouble signing up for PayPal Credit. Most PayPal Credit accounts have a minimum credit line of $250.
PayPal Credit offers several benefits to its users, provided they use their accounts responsibly.
Like all lines of credit, PayPal Credit offers spending flexibility to responsible spenders. Other unique features of a PayPal Credit account include:
Before signing up for PayPal Credit, it is important to also consider the potential downsides. As with any line of credit, PayPal Credit users should always exercise financial responsibility when using their accounts. Here are some of the drawbacks that can come with opening a PayPal Credit account:
Some users may also not realize that a PayPal Credit account can have a big impact on their credit score. For some, this is no issue. But for others, one small misstep can be seriously detrimental to their credit score.
As mentioned above, most users need to have a good credit score to qualify for PayPal Credit in the first place. But, if you are not careful, PayPal Credit can cause your credit score to drop. Here are a few ways that PayPal Credit can affect your credit score.
First, opening a PayPal Credit account requires a full credit check, or a hard pull of your credit. One hard pull will not have a major impact on your credit score. However, these do show up on your credit report, and can add up over time.
As with other lines of credit, missed payments and negative balances can damage your credit score. PayPal Credit reports to all three major credit bureaus. This means any activity on your PayPal Credit account can show up on your credit report.
Any missed payments on a PayPal Credit account can quickly add up. Late payments incur fees up to $41, and interest rates also add up quickly. If you do not make a payment on your PayPal Credit account, you will often end up owing more money. In addition to costing you money, repeatedly missing PayPal Credit payments can tank your credit score.
PayPal users can also sign up for PayPal Mastercard. Because this is a debit card, it does not affect your credit score. Debit cards only use existing funds already in your account, and do not require repayment.
If your PayPal Credit account has negatively impacted your credit score, you should consider hiring a credit repair company. Credit repair companies, like Credit Glory, can deal with creditors on your behalf to help resolve any credit disputes. We can also provide support and guidance to help you recover from a bad credit score. If you need help rebuilding your bad credit score because of PayPal Credit, contact Credit Glory today.
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