The news: PayPal will work with Nova Credit to broaden its underwriting process across its portfolio of consumer credit products, per a press release.

Why this matters: PayPal has largely relied on credit histories to make lending decisions. 

By broadening its underwriting to include cash-flow history with Nova Credit’s Cash Atlas, PayPal follows the lead of more junior fintechs like Block in using alternate underwriting practices.

Who this helps: Consumers with zero or insufficient credit histories could get more access to loans and other forms of credit. This often includes young adults, recent immigrants, cash and debit card users, and former credit card users with inactive accounts. 

These populations often have the means to responsibly pay back loans but get denied credit under traditional models that exclude elements like cash flow from the full picture of their financial health.

PayPal’s angle: In Q2 2025, PayPal experienced over 20% growth in transaction payment volume (TPV) for buy now, pay later (BNPL) loans. 

US consumers are hungry for alternative lines of credit, and PayPal misses out on volume when it denies a loan to a financially qualified individual based on limited credit history. It also knows its consumers could flee to other newer BNPL providers who already assess financial health through other means, like Cash App Afterpay.

Our take: PayPal’s current steps only broaden underwriting for US consumers. However, using Nova Credit internationally could open up even more lending opportunities in areas like Latin America and India, where there’s less access to traditional credit products.

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