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How to Build Credit While Using Cash Advance Services

March 28, 2025
Credit

The Credit-Building Challenge with Cash Advances

If you're using cash advance services, you're likely facing one of two scenarios: either you have limited credit history and are working to establish credit, or you have damaged credit that you're trying to rebuild. In either case, you're caught in a challenging situation—you need access to funds now, but you also need to build your credit for a more secure financial future.

The fundamental challenge is that most traditional cash advances (payday loans, credit card cash advances, etc.) don't report to credit bureaus, meaning they don't directly help build your credit score. However, this doesn't mean you can't strategically use cash advance services while simultaneously working to improve your credit.

This guide will show you practical strategies to build credit while using cash advance services, helping you meet your immediate financial needs while working toward long-term financial health.

Understanding How Credit Scores Work

Before diving into specific strategies, it's important to understand what factors influence your credit score:

  • Payment history (35%): Making on-time payments on credit accounts is the single most important factor
  • Credit utilization (30%): The percentage of your available credit that you're using
  • Length of credit history (15%): How long you've had credit accounts open
  • Credit mix (10%): Having different types of credit accounts (credit cards, loans, etc.)
  • New credit (10%): Recently opened accounts and credit inquiries

Most cash advances don't impact these factors because they aren't reported to credit bureaus. However, they can indirectly affect your credit if they lead to missed payments on other accounts or high credit card balances.

Cash Advance Services That Can Help Build Credit

While traditional payday loans don't report to credit bureaus, some newer financial services combine cash advance features with credit-building tools:

1. Credit Builder Cash Advance Apps

Several newer financial apps offer both cash advances and credit-building features:

  • MoneyLion: Offers cash advances up to $500 with its Instacash feature and reports Credit Builder Loan payments to all three major credit bureaus
  • Dave: Provides advances up to $500 and offers a credit-building feature called Dave Banking that reports to credit bureaus
  • Brigit: Offers advances up to $250 and includes credit monitoring and reporting features with its premium plan
  • Chime: While not strictly a cash advance app, its SpotMe feature functions similarly, and its Credit Builder secured credit card reports to major bureaus

2. Credit-Building Secured Cards

Some financial services combine secured credit cards (which report to credit bureaus) with cash advance-like features:

  • Chime Credit Builder: Functions like a secured card but with no interest and reports to major bureaus
  • Self: Combines a credit-builder loan with a secured card option after making regular payments
  • Cleo: Offers cash advances and a credit-building feature through its Cleo Builder program

3. Credit-Building Installment Loans

Some services offer small installment loans that function similarly to cash advances but report to credit bureaus:

  • Possible Finance: Offers small installment loans that report to credit bureaus, unlike traditional payday loans
  • LendUp: Provides short-term loans with a path to build credit through their platform
  • OppLoans: Offers installment loans that report to the three major credit bureaus

Strategies to Build Credit While Using Cash Advances

Strategy 1: Use Cash Advances to Prevent Credit-Damaging Events

One strategic approach is to use cash advances to prevent events that would damage your credit:

  • Avoid late payments: If you're at risk of missing a payment on a credit-reporting account (credit card, loan, etc.), a cash advance can help you make that payment on time, preserving your payment history
  • Prevent overdrafts: While bank overdrafts don't directly affect credit scores, unpaid overdrafts can be sent to collections, which does damage credit
  • Avoid high credit utilization: Using a cash advance instead of maxing out credit cards can keep your credit utilization ratio lower

Strategy 2: Allocate Cash Advance Savings to Credit-Building Products

If you're using cash advance apps with lower fees than traditional payday loans, allocate the savings to credit-building products:

  • Secured credit cards: Use the money saved on fees to fund the security deposit for a secured credit card, which reports to credit bureaus
  • Credit-builder loans: Services like Self offer loans specifically designed to build credit, with payments reported to all three bureaus
  • Secured loan: Some credit unions offer small secured loans designed to help build credit

Strategy 3: Use Credit-Building Features of Modern Financial Apps

Many modern financial apps offer both cash advances and credit-building features:

  • Activate credit reporting: If your cash advance app offers optional credit reporting for other activities (like bill payments), opt in to these features
  • Utilize "boost" features: Some services allow you to get credit for paying utilities and subscriptions
  • Link accounts strategically: Connect your bank accounts to services that offer both cash advances and credit monitoring/building

Strategy 4: Transition from Cash Advances to Credit-Building Alternatives

Create a plan to gradually transition from cash advances to more credit-positive alternatives:

  • Start with a secured credit card: Even with a small deposit of $200-$500, you can begin building credit
  • Graduate to credit-builder loans: These installment loans are designed specifically for building credit
  • Move to small personal loans: As your credit improves, you may qualify for small personal loans from credit unions or community banks

Step-by-Step Credit Building Plan While Using Cash Advances

Step 1: Stabilize Your Finances (1-3 Months)

Begin by using cash advances strategically while establishing financial stability:

  • Use cash advances only for true emergencies or to prevent credit-damaging events
  • Create a basic budget that includes repaying advances
  • Build a mini emergency fund of at least $100-$200 to reduce reliance on advances
  • Check your credit report for errors and dispute any inaccuracies

Step 2: Add Credit-Building Tools (Months 3-6)

Once you've stabilized your immediate finances, add specific credit-building tools:

  • Apply for a secured credit card with a low deposit requirement ($200-$300)
  • Use the secured card for small, regular purchases (under 30% of the limit)
  • Pay the secured card balance in full each month
  • Consider a credit-builder loan from a service like Self or a local credit union
  • Continue using cash advances only when absolutely necessary

Step 3: Expand Your Credit Mix (Months 6-12)

As your credit begins to improve, diversify your credit profile:

  • Apply for a second credit-building product (if you started with a secured card, add a credit-builder loan, or vice versa)
  • Request a credit limit increase on your secured card (if your payment history is perfect)
  • Consider becoming an authorized user on a family member's well-established credit card
  • Reduce cash advance usage as your emergency fund grows

Step 4: Graduate to Better Credit Products (Months 12-24)

As your credit score improves, transition to better financial products:

  • Apply for an unsecured credit card (many secured card issuers will upgrade you automatically)
  • Consider a small personal loan from a credit union if needed (instead of cash advances)
  • Continue building your emergency fund to eliminate the need for advances
  • Maintain perfect payment history on all credit accounts

Credit-Building Dos and Don'ts While Using Cash Advances

Do:

  • Do prioritize repaying cash advances on time to avoid fees that could impact other financial obligations
  • Do use cash advances strategically to prevent missed payments on credit-reporting accounts
  • Do build an emergency fund, even starting with just $5-$10 per paycheck
  • Do check your credit report regularly (annualcreditreport.com offers free weekly reports)
  • Do opt for cash advance services that offer credit-building features when possible
  • Do keep credit card utilization under 30% of available credit
  • Do make all payments on credit-reporting accounts on time, every time

Don't:

  • Don't use cash advances for non-essential purchases
  • Don't apply for multiple credit products at once (space applications at least 3-6 months apart)
  • Don't close old credit accounts, even after paying them off (length of history matters)
  • Don't miss payments on any credit-reporting accounts
  • Don't max out credit cards, even if you plan to pay them off
  • Don't ignore building an emergency fund while focusing on credit
  • Don't rely on cash advances as a long-term financial solution

Monitoring Your Progress

As you implement these strategies, it's important to track your progress:

  • Check your credit score monthly: Many cash advance apps and credit cards offer free credit score monitoring
  • Review your full credit report quarterly: Look for improvements and any errors that need to be disputed
  • Track your cash advance usage: Monitor whether your reliance on advances is decreasing over time
  • Measure emergency fund growth: Watch your savings increase as a buffer against future cash advance needs

Conclusion: Building Credit Is a Journey

Building credit while using cash advances requires a strategic approach and patience. By understanding how credit scores work, choosing the right financial tools, and following a step-by-step plan, you can meet your immediate financial needs while simultaneously improving your long-term financial health.

Remember that building good credit is a marathon, not a sprint. Small, consistent actions over time will yield significant results. As your credit improves, you'll gain access to better financial products with lower interest rates and better terms, reducing your need for cash advances and creating a positive cycle of financial improvement.

The goal isn't just to build credit—it's to build financial stability that eliminates the need for cash advances altogether. By following the strategies outlined in this guide, you can use cash advances as a stepping stone rather than a long-term solution, gradually working toward greater financial freedom and security.