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Will a Cash Advance Show up on Your Credit Report?
When you need cash during an emergency—and you don't have an emergency fund—it’s easy to only think about the short-term. Who cares how much this sketchy online loan from RealLoansNotaScam.com costs? Forget that this “lender” you found on Craigslist is literally a guy handing wadded-up ones out of the back of a Winnebago—you need cash and you need it now!
And yet, those long-term considerations can really come around to bite you in the behind, so they are good to keep in mind. Take cash advances for example. If you take one out, will it end up on your credit report? How will it affect your score? What even is a cash advance anyway?
That’s why we’re here. So sit back, take a deep breath, and remain calm as we answer your questions about cash advances, credit reports, and how the two relate.
How do credit reports work?
Credit reports are documents that contain a record of your borrowing history. They include stuff like outstanding balances, history of on-time payment (and any late or missed payments), the types of loans and credit cards you've taken out, accounts that have been sent to collections, bankruptcy filings, hard credit checks, etc. Most of the information on your credit report remains there for seven years, although some information, like bankruptcies, will stay on your report for longer.
These reports are created and maintained by the three major credit bureaus: Experian, TransUnion, and Equifax. Since some lenders, debt collectors, landlords, etc. might report consumer data to some but not all of the bureaus, information can vary across the reports. For this reason, you don’t actually have one credit report; you have three. And your credit score can change depending on which credit report was used to create it.
What is a cash advance?
There are two types of cash advances. The first type is a feature on your credit card, where you can use the card to take out cash. The amount of cash that you withdraw (plus an extra fee and any ATM fees you might also incur) is then added to your credit card balance in the same way that a regular purchase would be added.
Aside from the additional cash advance fee, credit card cash advances differ in a couple key ways from regular credit card transactions. First, they come with a higher APR than standard transactions. Second, there is no 30-day grace period for interest on these transactions; once they are added to your balance, interest starts accruing immediately. All in all, taking out a cash advance on your credit card is a good deal more expensive than simply using your card to make a purchase.
The second type of cash advance is a type of short-term no credit check loan. Similar to payday loans, these "cash advance loans" are advertised as being an “advance” on the borrower’s next paycheck. The typical repayment term for these loans is approximately two weeks, after which time the loan is to be repaid in a single lump sum.
(For all of the details on cash advances, check out the OppU Guide What is a Cash Advance?)
The interest rates for these payday cash advances are extremely high, with an average APR over 300%. While their interest rates look reasonable in the short-term, the difficulty that many customers have repaying these loans can often mean rolling their loan over or paying it off and immediately borrowing a new one. The more that a person rolls over or reborrows their loan in order to make their payments, the more likely they are to become trapped in a predatory cycle of debt.
Are credit card cash advances added to your credit report?
The answer to this question is: kinda. Anytime you add (or subtract) from your credit card balance, that change is noted on your credit report. So a credit card cash advance will show up on your report as an addition to your credit card balance, but it won’t be noted any differently than a regular transaction would be.
So can a credit card cash advance negatively affect your credit? It can, but it’s not likely to. When it comes to your credit card balances, it’s a good idea to keep them pretty low relative to your total credit limit—even if you pay off your balances in full every month. Keeping your debt utilization ratio beneath 30% (meaning that you never spend more than 30% of your credit limit) will mostly keep those balances from negatively affecting your credit.
In order for a credit card cash advance to negatively affect your credit score, it would have to either push your balances above 30% or it would have to be such a massive increase to your balances that it would reflect a major change to your total amounts owed. Unless you are right beneath that 30% ratio or are taking out thousands of dollars worth of cash advances in a short period of time, your score will be unaffected.
Will a payday cash advance loan show up on your credit report?
The answer here is “no” with a small caveat. Payday cash advances are part of a subset of bad credit loans called “no credit check loans.” Since these no credit check lenders do not run any checks on your credit history during their application process, they also do not report your payment information to the credit bureaus.
Regular lenders like banks tend to run a hard credit check when you apply for a personal loan. That hard check returns a full copy of your credit report and gets noted on the report itself. These checks will often lower your score slightly and can do so for up to two years. Many bad credit lenders run what’s called a “soft” check on your score, which returns less information and won’t affect your score at all. Some of these lenders also report your payment information, which can help your score if those payments are being made on-time.
No credit check lenders, on the other hand, do not run any kind of credit check and do not report payment information. They do, however, send unpaid accounts to collection agencies. And those agencies will report those accounts to the credit bureaus. (The exception is title lenders, who will repossess your car in order to repay the amount owed.) So while a payday cash advance loan will not end up on your credit report and won’t affect your score, an unpaid cash advance loan will indeed show up on your report and hurt your credit score.