Bill Me Later Can Ding Your Credit Score

BillMeLater is a new service that does what its name says: you can buy something paying using BillMeLater, they’ll front the cash, and send you a bill later, but, FiLife reports that what the name doesn’t tell you is that using it could temporarily damage your credit score.

Essentially, BillMeLater is giving you credit, and just like a credit card, they have to do what’s called a “hard pull” on your credit report. Hard pulls will drop your credit score roughly five points for roughly up to six months afterwards. That information isn’t disclosed in their FAQ and could come as a surprise to consumers considering BillMeLater is competing in the same service market as Paypal and Google Checkout, where they want you to choose it as an alternative payment option at checkout, neither of which impact your credit report.

If that doesn’t bother you then you may interested to know that BillMeLater is offering free shipping and discounts for some of its affiliates, just like Paypal and Google Checkout did last year in an effort to build up a user base during the holiday season.

Bill Me Later Should Warn Users of its Credit Score Impact [FiLife]
What’s a Hard Credit Check, And Why They’re Valuable [My Money Blog]


Edit Your Comment

  1. ShortBus says:

    Wow, this is really stretching the “things-to-complain-about” category. A 5 point drop in your FICO doesn’t mean squat. And they’re extending you credit; why dos it surprise anyone that they do a credit check? PayPal is hardly the same service. All they do is move money from your bank account/credit card to a seller; no credit involved.

  2. faust1200 says:

    @ShortBus: I imagine there are some people in a situation who need every plus point they can muster. Especially if they are about to get a house or a car, etc.

  3. Ben Popken says:

    @ShortBus: Obviously this is different from Paypal, but since they want you to choose it as a payment option at checkout, it’s competing in the same market as Paypal and Google Checkout.

  4. ShortBus says:

    @faust1200: Do they report a new tradeline on your credit report? If so, then they will actually help your credit score in the long run (assuming you keep current on the payments, obviously).

  5. PølάrβǽЯ says:

    Yet another reason the Fair Credit Reporting or whatevertheycallit Act needs to be stuck in a paper shredder. Then, the FTC or whoever should write up like 5 new different acts, and we as a DEMOCRATIC friggin nation should VOTE on which one we like. And we as a people should also be able to draft initiatives or referendums or whateveryoucallthem and vote on them to change the act later on.

  6. faust1200 says:

    I think the important lesson here that anytime you are extended credit that a “hard pull” (-5 for up to 6 mos.) will probably be done on your credit whether it is a CC company or some strangely named service like this one.

  7. DallasDMD says:

    @Ben Popken: Bill Me Later is a line of credit. Google Checkout uses credit cards you already have.

    This isn’t a problem specific to Bill Me Later.

  8. humphrmi says:

    @DallasDMD: Right, I think that’s been established. But as others pointed out, it’s on the same real estate on webpages as Google Check-Out and PayPal, implying to the ignorant that it’s the same type of transaction as using Google or Paypal.

    Has anyone tried it? My only question would be, do they clearly present a credit disclosure statement? If so, and you still proceed, shame on you. If not, shame on them.

  9. Fait Accompli says:

    @ShortBus: Something doesn’t have to be complaint-worthy to be blog-worthy. This is helpful information for anyone considering the service.

  10. ConsumptionJunkie says:


    Bill Me Later does a “hard pull,” as opposed to a soft one when they check your credit. A hard pull lowers your credit score five points for about six months. A soft pull that many banks, employers, and creditors use has no effect on your credit score. Five points may not seem like a lot, but one blogger says that you should be compensated $100 for every hard pull. Read the My Money Blog:


  11. swalve says:

    @aaron8301: We’re not a democracy, we’re a republic.

  12. glinters says:

    I thought I was the only one PO’d about this…I used this as an option for payment on I was suprised when I saw it show up on my credit rating. I thought I read the fine print but didn’t say anything about checking my credit score. We are shopping for a mortgage so every point counts.

  13. Scuba Steve says:

    @swalve: We’re a amalgamation of different systems of decision making bodies, from appointed judges, to democratically elected local officials to representatively elected state and federal officials.

  14. sven.kirk says:

    @ConsumptionJunkie: Not as an attack to you, but why should the consumer be compensated when YOU are asking for the line of credit. If you have good credit, it really shouldn’t matter. Poor credit, you shouldn’t be applying for the new credit. And the banks/financial institutions need some way to know this is truly you making this purchase. And so that they have somebody to go after they run out on the debt.

  15. rockergal says:

    hmm am I one of the few that doesn’t buy anything if I don’t have the money to pay for it now?
    If I can afford it later I will buy it later.

  16. Mr. Gunn says:

    5 points isn’t absolute, nor is it additive. Inquiries are a little more complicated than 1 inquiry = -5 points. Rather, it’s on a tiered system. 1 might not drop your score at all, 2-3 might do 5 points, 4-5 might do 7 points, 6+ might not do anything extra. Also, because people tend to shop around for loans, each of which is an inquiry, multiple inquiries around the same time are often counted as one.

  17. D-Bo says:


    It’s not necessarily a complaint but an FYI. That’s what this site is all about.

  18. Snakeophelia says:

    I’ve used Bill Me Later before. It works much like a credit card, only you never have a physical card in your hand. However, I just checked my credit reports and my BML account that I started two years ago and closed earlier this year is not on there. Other loans and credit cards that were paid in full and closed are there, but BML is not.

    The interest rate is crappy, though, so there’s no reason to use it if you have a decent credit card.

  19. speedwell (propagandist and secular snarkist) says:

    @rockergal: No, I’m the second one. The third one is my uncle in LA, who manages the finances of everyone over 65 in the family (including himself) and can make a dime stand on end in a hurricane.

  20. hellinmyeyes says:

    I did BillMeLater with NewEgg. It’s essentially a line of credit through Chase Bank. They even send you a credit card, which you can use at a number of retailers. It’s the same as a store line of credit. There should be no surprises here.

  21. Jon Parker says:

    Can someone please explain to me why Bill Me Later is a good idea? I’m already not responsible for unauthorized charges with my credit card, plus I can do charge backs for unacceptable merchandise and get extended warranty coverage. I don’t get it. This seems like a pretty worthless business model to me.

  22. forever_knight says:

    frankly, i enjoy a good hard pull.

    soft pulls don’t do it for me.

  23. That70sHeidi says:

    When you click the link about “learn more” for BillMeLater upon checkout, you learn that yes, they impose an interest rate, and yes they check your credit rating. Even without the last bit, you’d see that they’re extending credit to you, and thus become like a credit card. So yeah, it’d hit your credit score. If people are struggling over the concept of BillMeLater, they shouldn’t be buying things at all.

    Maybe they’re confusing this with old skool COD?

  24. Kottles says:

    @rockergal: Do you own a car, or a house maybe. What about college loans? The majority of these are far too expensive to wait to have the cash for, with the car being the exception if you buy older.

    I know you are talking mostly about consumer items, but cars and houses are indeed purchases too.

  25. n/a says:

    I just opted for bill me later for a purchase, I can live with the 6mo -5 on my FICO, no worries here, I got my item and plan to pay it off well before any fees are slapped on my ass.

  26. carlitos101 says:

    I purchased a computer with BillMeLater. The service was great. I did not get an email or letter from the credit monitoring service about a credit check?

  27. davidfbecker says:

    @carlitos101: Hmm… me too. I just built a new desktop on Newegg with one of their Preferred Accounts, got in on their “no payments no interest 12 months” dealies, and their Preferred Account happens to be Powered by Bill Me Later. Hopefully this doesn’t come back to bite me in the ass..

  28. furball says:

    Newegg + Bill Me Later + no interest for several months = heaven. BML’s not an evil service, but you have to know what you’re doing when you use it. I’m in the same camp as David above. It’s nice to have an interest-free loan. Normally with interest-free purchased I just take the amount of the purchase, put it into a high-yield CD, then when the CD matures pay off the original amount owed and pocket the interest earned.

  29. RogerKollarbear says:

    Comment%20on%20Bill Me Later Can Ding Your Credit Score I used this service avidly for a while. the trick is to get the free
    shipping, and pay the bill immediately. Just DON’T do what I just did:
    forget to pay the bill! They charged me a whole bunch, yet notified me ONCE.

    All in all, the purchase was for $47+$44 finance charges(2 cycles?) +
    **57%** APR = Horror!!
    FIFTY-SEVEN PERCENT APR!! I’m not sure if that’s legal, but i’m closing my