One way in which PayPal Pay in 4 may affect your credit score is by running a credit check on you when you use it as a payment method for the first time. Even though PayPal doesn't run a credit check on every customer, a credit check on select customers is possible. That being said, a single credit check may not impact your credit score. However, it can appear on your credit report as a hard inquiry, which can be seen by any lender that checks your credit report in the future. If several such inquiries are listed on your file too close to each other, it could raise a red flag for potential lenders by making you appear credit hungry.
In general, PayPal Pay in 4 can be a helpful tool for budgeting small purchases by paying for them over six weeks without paying anything to use the service. You are not even charged any late fees by Pay in 4 if you are unable to make a payment. However, if you default, it could end up on your credit file and pull your credit score down.
In the end, as with any other form of credit, it's up to you to use the service responsibly to manage your finances and avoid falling into a debt trap.
If you are already facing financial stress from debt, using PayPal Pay in 4 (or any other BNPL service) to meet your everyday expenses may not be a practical solution in the long run. Even though you are not charged anything for the service, if you use it to purchase items you can't afford to repay, you may eventually fall behind on your repayments, leading to the possibility of a default being listed on your credit report. This could impact your chances of accessing other forms of credit in the future, as a default could show up on your file when you apply for a home loan or even a credit card, and is a red flag for potential lenders.
If you are struggling to manage your expenses, taking on more credit may not improve your situation. Instead, you may consider reassessing your budget or seek help from a financial counsellor by calling the National Debt Helpline to find a long-term solution for getting your finances back on track.
If you are already using PayPal Pay in 4, and you know you will be unable to make a repayment, you may contact their customer service team to discuss your repayment schedule to avoid a payment default.