When You Get a Cash Advance, Do They Check Your Credit Score?

For people with not-so-great or flat out bad credit, applying for a loan or a credit card can be nerve-wracking. After all, applying for new credit is something that gets added to your credit report, and it usually causes your score to lower just a little bit.

When your score is already hurting, the last thing you need is for your score to drop any further. Plus, what if you apply for a loan and you get denied for it? Now you’ve got a lower score and nothing to show for it!

One option some potential borrowers explore is a cash advance. But will that lead to a credit check? Will a cash advance affect your score at all?

With a credit card cash advance, you use your card to withdraw cash.

There are two different types of loans that are called "cash advances." One is a credit card cash advance. This is a type of credit card transaction where you use your card to take out paper money and the amount you withdraw is then added to your total balance.

The annual percentage rate (APR) for a credit card cash advance is usually much higher than the APR for a regular transaction. Plus, the cash advance does not come with a 30-day interest-free grace period like regular transactions do. This means that the interest for cash advances starts accruing immediately.

Plus, most credit card cash advances carry an additional fee just to process the transaction. The fee is often expressed as either a dollar amount or a smaller percentage of the amount withdrawn. For instance: $10 or 3% of the amount withdrawn, whichever is higher. All in all, credit card cash advances are a much more expensive alternative to regular credit card use.

Some predatory loans advertise themselves as “cash advance loans.”

There are loans that may be advertised as "cash advance loans" but are not tied to a credit card.

These loans are likely a subset of bad credit loans. They’re financial products with short terms and high rates that are often very difficult for people to repay on time. Lenders who offer these products often stand to make more money from the customer rolling their loan over and entering a dangerous cycle of debt.

However, even though these two types of cash advances are very different, neither will likely involve a credit check.

With either type of cash advance, they won’t check your credit.

When you take out a credit card cash advance, there is no credit check run. In fact, the transaction won’t even show up on your credit report. It will just be seen as an increase in your total credit card balance.

As we mentioned earlier, most cash advance loans fall under the heading of “no credit check loans,” which pretty obviously means that they do not involve a credit check. (For all of the information on no credit check loans in one post, check out the OppU Ultimate Guide to No Credit Check Loans.) Lenders that offer loans like these usually don’t report payment information to the credit bureaus either, which means that your cash advance loan won’t be showing up on your credit report.

When a lender runs a full check on your credit history—otherwise known as a “hard” credit check—it will slightly ding your score.

The effects of the hard check won’t last long, but it’s always best if you can keep your score from lowering, even if it’s just a temporary “ding.”

There are two ways that a cash advance could affect your credit score.

Now, the only way that a credit card cash advance will affect your credit is if you take out a series of very large cash advances and add so much money to your balance that it starts to affect the “amounts owed” component of your credit score.

When it comes to credit cards, your credit score takes into account your “credit utilization ratio,” which measures how much of your total limit you’re spending. If you had a total credit limit of $10,000 and a balance of $3,000, your credit utilization ratio would be 30%.

And in fact, 30% is the ratio that you should aim to stay below. Above that, and you’ll start seeing your score be negatively affected. Luckily, it will probably take quite a few cash advances to push your balance above 30%, so this probably isn’t something you’ll have to worry about.

A cash advance loan, on the other hand, could affect your score if you fail to pay it back. In a situation like that, the lender will probably sell the debt to a collections agency, who will then report it to the credit bureau. Once that collections account is on your report, you will see your score be seriously impacted.