You have many options when you're tight on cash and need to pay for emergency expenses, household expenses or upcoming bills. While some may resort to credit cards and predatory payday lenders, more viable routes exist. One example is a cash advance.
An instant cash advance can get you money quickly without many pitfalls of traditional alternatives. But does a cash advance impact your credit score?
How Cash Advances Work
There are two main types of cash advances: Those that come from an instant cash advance app or one that comes from your credit card. With the former, you're essentially borrowing from a future paycheck. You can get a set amount of money, get paid early and automatically repay the advance through your next check.
With a credit card cash advance, you're borrowing money against your credit limit. Most cards limit how much you can borrow, and whatever you take goes toward your balance. You can pay it off with your next statement.
Either way, cash advances don't affect your credit score directly. In both instances, credit inquiries aren't part of the equation. Your credit card already has that information and gives you an advance limit alongside the standard credit limit. For cash advance apps, you provide employment and income information.
With that information, apps can provide approval instantly without making a credit inquiry.
Because the process is so simple, cash advance apps are usually the best choice for most people. You don't have to worry about maxing out a credit card, going to a payday lender and dealing with ridiculous fees or filling out lengthy applications with a bank. You can do everything on your smartphone and get instant approval without impacting your credit score.
When Cash Advances Could Affect Your Credit
Cash advances won't impact your credit score directly. But they could lead to issues if you don't repay it. The beauty of cash advance apps is that they consider your employment and income to determine how much you can borrow. Then, they pull it from your check automatically.
But if you were to get a cash advance through your credit card and fail to pay your bills, you could experience credit score troubles.
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