Grant Phillips Law PLLC

Merchant Cash Advance And My Credit Score

You have decided to originate several Merchant Cash Advances. Your only remaining question is how the MCA’s will impact your credit report and your cash advance credit score.

This article will attempt to provide a thorough answer to the above questions and explain the ramifications of a Merchant Cash Advance and the Personal Guarantors credit score.

When your credit report is first pulled:

At the time of originating a Merchant Cash Advance, a MCA Funder will conduct what it calls underwriting and or due diligence. This is the time for an MCA Funder to evaluate your borrowing credentials and to determine your existing debt. Although a vast majority of MCA Funders only care to see three (3) months of bank statements, to determine if there is a constant flow of revenue and receipts, other funders will add the extra provision of pulling your credit. A Merchant provides permission and its social security number in the Merchant Cash Advance Application. At this time the proposed funder will pull a HARD copy of your report. The real problems begin when a Merchant Cash Advance brokers shops your MCA application around town, providing your applications and permission to pull credit to multiple and numerous funders.

A hard pull or query remains on your credit report for 2 years. Too many pulls will cause your score to decrease as the credit agencies (Experian, Transunion and Equifax) will determine that you are having difficulty obtaining credit.

Beware – you are signing a Personal Guarantee.

Another reason the MCA Funder will pull your credit report and score at the beginning of the process is because when originated you will be required to act as a Personal Guarantor. Thus, the funder pulls your personal credit to determine your worthiness to obtain a Merchant Cash Advance.

MCA Funders Credit Requirements.

The vast majority of MCA funders require at least a 550 to 650 credit score in order to provide working capital to you via the use of a Merchant Cash Advance.

Alternatives – A Soft Pull.

There is another form of pulling credit – often referred to as a “soft” pull. This type of credit pull does not affect your credit score. Therefore it is prudent when using a broker to make sure any MCA Funder the broker approaches with your application, conducts a soft pull only.
Other tricks to keeping your Credit Score Solid even after an MCA – 45 day exception.

If you know that numerous Merchant Cash Advance Funder will be pulling your credit and pulling as hard pulls, you should have all the potential lenders pull within no more than Forty-Five (45) days, the credit reporting agency will only consider the multiple hard pulls as one single pull. This will keep your credit score in place. Remember any Hard Credit Pull after 45 days WILL BE CONSIDERED a PULL ON YOUR CREDIT AND REMAIN THERE FOR 2 YEARS.

So you obtained an MCA – now what?

It is very rare for a Merchant Cash Advance Funder to report your Merchant Cash Advance to the credit agencies. 1. It costs them money and 2. Other than determining your credit score and therefore your credit worthiness, a MCA Funder typically won’t report the providing of a Merchant Cash Advance.
What Happens to My Credit Score if I default on my Merchant Cash Advance?

For the reasons stated above it is unlikely that an MCA Funder will report your default to the Credit Reporting Agencies. Also, because a Merchant Cash Advance provides an MCA Funder the ability to sue on a default, it also provides permission for them to file UCC liens that are far more derogatory and painful than a drop in one’s credit score. A UCC lien can lock up ones bank accounts.

Beware of Judgments – Do not ignore lawsuits.

One tool available to a Merchant Cash Advance Funder is the filing of a lawsuit against the personal guarantor merchant and the business that took out the MCA. If not responded to timely, the Plaintiff MCA Funder may obtain a default or summary judgment – a judgment with an Order of what is owed. This judgment can and often is reported to the Credit Agencies.


As can be determined from the explanations above, Credit Reports and Scores do not play a massive roll in a Merchant Cash Advance – but one should take caution to limit how many funders a broker may “shop” your application to, instruct that only “Soft” pulls be conducted and avoid Judgments.

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