Paypal credit is now added to your file

Chappaz

Hi folks.

Just a heads up.

I've seen a lot of talk on the web about the frustration of Paypal not attributing Paypal Credit activity to people's credit reports. I was a bit frustrated about this myself as I had hoped to use it as another method of building credit.

It turns out that they now do. I'm not sure how recent this is, but in my latest report, Paypal Credit was added as another credit card.

Unfortunately for me from a credit score perspective, my report this month dropped by 77 points as a result. I know this number is meaningless, but it's still not nice to see it going down into the sub-300s. I also checked some of MSE's eligibility tools for credit cards (the soft search), and my chance of gaining even basic Aqua credit builder cards is now lower (85% from guaranteed previously).

I assume this is because I've added a new "card" which naturally causes a dip. But the problem with Paypal credit in my case is that I used it to buy a laptop which used up £850 of the £1000 limit. I've been keeping my existing Aqua card under 25% credit utilisation so it's more favourable, but this new info on my file with Paypal credit has messed that up.

Does anyone think it would be wise to pay off a big chunk of that Paypal credit early to get the credit utilisation down? Would it make much of a difference or should I just continue paying the usual monthly fee as part of the deal for the laptop?

I had hoped that if Paypal was added to my credit file, it would be considered a loan, but it seems it's considered as a credit card (probably the obvious choice now I think about it), so all the things like credit utilisation apply.

Arleen

Since you know that the number is meaningless, then there is no reason to care about whether it dips under 300 or skyrockets to 999. Heck, when I first moved to UK, had zero credit history, my score was way better than it is even now with years of healthy accounts on it. Just ignore it.

As for your question, credit cards are horrible as a loan because they are usually high rate unless on some 0% promotional time. So while I do not know what is your paypal rate, if it's above zero and you have money to repay more of it, do so and save money. If it's on 0%, then why would you? In the end the point of good credit history is to save money, by having better rates and more 0% deals, so use it.

Chappaz

Thanks for the reply.

Yes I agree, it's a meaningless score. But the score does appear to meet the strength of the credit report, as the MSE Club eligibility checker has me below 50% chance for even the most bog-standard credit cards. I'm not even guaranteed to secure a credit builder card!

Building up a good credit history is a tricky business. I've set everything in motion to build it but I suspect it's going to take a while. My issue was that I had a poor file because I've never had credit before to prove my worth. Rather annoyingly, you appear to get slapped for opening the credit to build the score.

MrsTinks

Yes you do, but ultimately it then comes back up - the key here is TIME. All lenders want to see if you are managing your credit over time.

Lots of applications or new products will temporarily lower anyone's chances of acceptance or score or whatever. They don't want to see people taking out LOTS of new credit as it's likely to be an indicator of not managing your finances properly. Appearing desperate.

So plug away at both paypal and your card, pay the card off completely instead of having a constant balance on it.

Arleen

Been there, and I will tell you that do not hope for any good credit for at least 2 years when you start building from nothing, maybe less if you at least have 3+ years residency under your belt already (I was a migrant, so it was extremely problematic for me to get anything opened up, including basic bank account). But you didn't get "slapped" for opening it, it only shows how meaningless credit score is!
Re-read my example from the previous post, how I had an amazing score with a clean file, better than I have now with years of pristine accounts. It simply does not matter, and rarely matches up with reality. Focus on what's on file instead, and you will be way happier . Similarly, the eligibility tool is just a guidance, and while it's better than score, it's still a slightly better guess.


Just hang in there, pay your cards in full unless on a promotional rate, get a phone contract, and with time you will be able to get mainstream credit. You already have one card, and it's enough to build up (I started with aqua card myself), maybe in 6-12 months apply for one of the mainstream lenders like Tesco or Sainsbury, see what happens. You may be surprised to get excellent 0% spending card with a big limit.