If you take a Cash Advance on a CC.... do they creditors look down at that when reveiwing for credit increases and etc?
It has been said that taking cash advances may lower your internal score with a creditor. I don't think I've ever seen hard proof of this.
I doubt it. I use my credit 99% for cash advances and or balance transfers and I have built my credit to over $150,000. CreditWorks encourages the use of credit only as a vehicle to better and less expensive credit. www.creditsense.com
FCNB reps have told me cash advances are a big negative as far as they are concerned, though I've never tested the matter. I was told cash advances are considered a sign of poor money management and would hurt a person's changes for limit increases, unsecuring a secured card, etc.
It is possible that cash advances are a red flag to subprime credit grantors and not a big deal to the prime grantors. Remember, we are dealing with internal scoring systems. FICO cannot tell the difference between purchases and cash advances. To FICO a balance is a balance.
I think it varies from lender to lender. For example, Nextcard says that too many cash advances are a negative factor for getting line increases while MBNA encourages cash advances by offering low promotional rates for them.
I asked this very question of a credit supervisor at Citibank. She told me flat out that Citibank does utilize an internal score and that cash advances lower, rather than raise, the score. Basically, the supposition is that if you are dipping into borrowed money simply to maintain a positive cashflow then something is amiss in your financial life. Of course, there are many reasons why one might want a cash advance, so I disagree with their logic. Nevertheless, that's the logic they're using evidently. The irony, as daveberk pointed out, is that these same companies encourage such cash advances because they make good money on them. It's as if Daddy encourages a certain behavior, while Mommy then subsequently punishes that very same behavior. Doc
Some bank will consider you're in financial problem when you're taking cash advance such as FCNB. Ron.
The only time that a Creditor will look as a cash advance as a Negitive in applying for Credit is if for example: Credit Card account that you have with a High balance, only making minimum payments, and there have been a lot of recent Multiple ATM and cash advances from Banks.. This is a sign of possible risk.. Most Creditors like to have Customers use cash advances, ATM, ect.. because of the fees, and usually Higher Interest rates.. Most of the time these type of Cash advance transactions will be in Cat B on your summary line on your statements.. Balance Transfers are treated as cash.. but are usually at a lower interest rate until the promo runs out..
I was told the same by an executive assistant at Bank of America. She has said so without me even asking. And since they make lots of fees out of every cash advance, she has no reason to say that unless it's true. Saar
Providian once declined me for an increase because of my ratio of cash advances to purchases. I'd done one cash advance ever because somehow I left my atm at home. I'd made a gas purchase or so on their card that month. Bingo, bad ratio. Cap1 also said cash advances are a red flag to financial instability and lowers your profitability score. I have been getting 2k at a time credit line increases with cap1 and the only thing I did was use them for balance transfers and make 1k and above payments every month for several months... and a few gas purchases (transfered off teaser rates to 9.9) and then I'll pay them off in lump sums since I'm keeping their cards. they seemed to like that kind of activity.
If you have a NO FEE cash advance, fine do it...otherwise it is NEVER a good thing to do. Sometimes they add fees of up to 4%, and sometimes the interest rate is like 24.99%. Also another thing to consider is the payment of the CASH ADVANCE is LAST in order!!! You pay LOWEST to HIGHEST... EXAMPLE...you have $5,000 in purchases @ 9.99% and a $1,000 CASH ADVANCE @ 24.99%...that CASH ADVANCE @ 24.99% will collect interest until you pay off the 9.99% rate for purchases in FULL...which may be years!!!
George is right. Whenever possible pay the full amount on a loan with split interest. I usually liquidate the account as soon as the teaser rate expires. www.creditsense.com
