The Role of Credit Scores in Cash Advances

Cash advances are often used to cover unexpected expenses or to bridge a financial gap until your next paycheck arrives.

Getting approved for a cash advance can be a challenge if you have a low credit score. But don’t worry, this isn’t the case all of the time. In fact, there are plenty of cash advances available if you have bad credit.

In this blog, we're gonna explore the role of credit scores in cash advances and take a look at some cash advance services that don't take credit scores into account.

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What is a credit score?

Before we dive into the role of credit scores in cash advances, let's define what a credit score is.

A credit score is a number that represents your creditworthiness (how suitable you are for taking out credit) based on your credit history (how reliable you’ve been at making payments in the past).

This number is calculated using a variety of factors, including your payment history, credit utilization, length of credit history, types of credit, and recent credit inquiries.

The most commonly used credit score is the FICO score, which ranges from 300 to 850. On the FICO scale, a score between 580 and 669 is considered fair, and one between 300 and 579 is poor.

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Why do cash advance providers care about your credit score?

Some cash advance providers care about your credit score because they’re massive nerds, we mean, because it gives them an idea of how likely you are to repay the cash advance. A higher credit score indicates that you have a history of paying your bills on time and managing your finances.

So, some cash advance providers use your credit score to determine whether or not to approve your application and what interest rate to charge. If you have a low credit score, some providers could see you as being “high risk” and charge higher interest rates, or not let you access as much money.

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Cash advance services that don't take credit scores into account

While many cash advance providers do consider credit scores when making decisions about your eligibility, there are some really cool and chill services that don't. Instead, they calculate eligibility based on your income. Like, ahem, Cleo.

Income-based cash advance services look at your income and expenses to determine how much you can afford to take out in a cash advance. This means that they don’t need to know what your credit score is at all during the cash advance application process.

One example of an income-based cash advance service is Earnin. Earnin is a money app that connects to your employer's payroll system and tracks the hours you work. You can then request an advance on your paycheck, which is deposited into your bank account.

However, at Cleo we know that not everyone looking for an income-based cash advance has a fixed employer - like if you work in the gig economy. Cleo’s cash advance is freelancer friendly and doesn’t require any employment verification.

Instead, you just connect Cleo to your main checking account, and our super smart AI uses the information that gives it to determine your eligibility. This is based on stuff like how much money you have coming into your account each month (which is why you should definitely connect the account you get paid into).

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The verdict on income-based cash advance services

Income-based cash advance services can be a good option for people with low credit scores who need cash. Here are some things to consider when deciding if a cash advance is right for you:

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No credit check: Income-based cash advance services don't require a credit check, which means you may be able to qualify even if you have a low credit score. Nice.

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Low interest: Cleo has 0% interest. So if you borrow $170, you repay $170. It’s that simple.  Which can save you money compared to traditional cash advance providers that might charge interest.

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Employment verification: Some income-based cash advance providers require employment verification, or to be employed in a physical location. If you’re a freelancer, you’ll wanna find the right money app for you - that doesn’t require employment verification.

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Overall, income-based cash advance services can be a good option for people who need a cash advance and don't have good credit. However, it is always important to weigh the pros and cons and compare different services to find the one that's right for you.

And always read the terms and conditions. Keep those receipts 💅

And while you’re here…

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Enjoy this post? Give it a share or send it along to a friend. You never know, it could make a big difference. Big love. Cleo 💙

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*Cleo Plus is our subscription service, which offers eligible users cashback on your money, information on your credit score, and access to cash advances (“Cash Advance”). Advance amounts will vary based on eligibility. If you don’t want to subscribe, you can also apply for cash advance by contacting our customer service at team@meetcleo.com. To learn more about eligibility, repayment, and overall terms, please visit: meetcleo.com/terms.