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A lower FICO = universally crummy gift.
 

It’s likely that those consumers who are actually buying things this holiday season will be doing so online. And some of you might use Bill Me Later, a service from eBay that allows you to — as the name suggests– be billed later.

We’d like to take this opportunity to remind you of what my former boss Ron Lieber pointed out last year — Bill Me Later can ding your credit score. And the company’s Web site doesn’t do a great job of disclosing that. Here’s what the Bill Me Later FAQ still says:

Bill Me Later will review your credit report prior to opening your account. You must provide us permission to review your credit report when completing your request to become a Bill Me Later customer. Bill Me Later is a credit account that you can use to make purchases. Bill Me Later will review the current status of your account each time you make a purchase but your full credit report is not reviewed for every Bill Me Later purchase.

It continues by saying that Bill Me Later won’t review your credit report for each transaction, but your credit report might be viewed “periodically to provide you with the maximum buying power possible.”

“It’s pretty much like a credit card,” Mark Lavelle, Bill Me Later VP of Corporate Development says. When you apply, it counts as a hard inquiry, just if you applied for a student loan, credit card or any other line of credit. It also will show up on your credit report as a new account.



This is all in the fine print of the Bill Me Later terms and conditions, but since it’s a newish product, a lot of consumers might get confused. I personally had to poke around the site for a while to find the information. I later learned that the information I really wanted about fees and interest rates wasn’t available online — unless I began the application process. (FYI -Bill Me Later is offered through CIT Bank.)

Also, like a credit card, Bill Me Later will charge you fees. If you don’t pay in full within 30 days, you’ll face 19.9% interest on the amount owed. Additionally, there are tiered fees, which vary depending on the total balance owed. Lavelle says that Bill Me Later tends to draw consumers with higher credit profiles and that approximately 65% of the site’s customers pay on time and in full. But 35% do not and fork over their hard-earned money. Don’t be one of them.

We advise you give your credit score the gift of rest, and figure out some other form of payment instead. It’s already taken some hits this year.