Does a Cash Advance Affect Your Credit Score in Australia?

Thinking about accessing some of your pay before payday but worried about what it could mean for your credit score?

Whether a cash advance affects your credit score in Australia depends on the type of service you use, whether a credit enquiry is made and what information, if any, is reported to a credit reporting body.

When you apply with us, we do not make a credit enquiry on your file with a credit reporting agency. That means requesting a MyPayNow wage advance does not create the type of credit enquiry that can appear on your credit report after some conventional credit applications.

That does not mean you should ignore the financial impact of an advance. You still need to consider the cost, your repayment commitment and how having less money available later could affect your budget.

Does a cash advance affect your credit score?

A cash advance can affect your credit score in some circumstances, but it does not automatically do so.

The answer depends on how the product works and the provider's credit-checking and reporting practices.

When you apply for some forms of credit, the provider may request your credit report, and the application can then appear on your report as a credit enquiry.

According to Moneysmart, factors used to calculate a credit score can include how much money you have borrowed, how many credit applications you have made and whether you make repayments on time.

Different services can use different assessment processes, so it is worth checking how a particular provider assesses you before applying.

With us, no credit enquiry is made on your file with a credit reporting agency. We instead assess eligibility using information relevant to your circumstances, including your employment and banking information.

What is a credit score?

A credit score is a number based on information contained in your credit report.

Banks, lenders and other credit providers may use your credit history and score when deciding whether to offer you credit.

Your credit report can include information about:

• credit accounts you currently hold or previously held

• applications you have made for credit

• your repayment history

• overdue accounts and defaults

• financial hardship information

• court judgments and bankruptcy information

• information used to identify you

The exact score you receive can vary between credit reporting bodies because different organisations may use different information and scoring methods.

Generally, a higher credit score indicates a lower perceived credit risk. However, a credit score is not necessarily the only information a lender will consider when assessing an application.

When could a cash advance affect your credit report?

There are several ways a cash advance or other credit arrangement could potentially be connected with your credit history.

A credit enquiry is recorded

When you apply for certain credit products, the provider may request information from a credit reporting body, and that request may appear on your credit report as a credit enquiry.

Credit enquiries can remain on an Australian credit report for five years. Making several applications for credit over a short period may also affect your credit score or how a prospective lender views your application.

Before using a particular cash advance or credit service, check whether the provider conducts:

• a credit enquiry that will be recorded on your credit report

• another type of assessment that does not create a credit enquiry

• no enquiry with a credit reporting body

Providers do not all assess applications in the same way.

Repayment information is reported

Some credit providers can report information about your repayment history.

Repayment history can show whether payments were made on time or missed. According to the Office of the Australian Information Commissioner, repayment history information can remain on your credit report for two years.

Defaults generally remain for five years, while serious credit infringements can remain for seven years.

Whether these types of reporting apply to a particular cash advance will depend on the product and provider.

Repaying an advance affects other commitments

There is also a less direct way in which accessing money early can affect your financial position.

Even where an advance does not result in a credit enquiry, you still have to repay it.

For example, if part of your next pay is used to repay an advance, its fee and interest, you will have less of that pay available for rent, utilities, existing loan repayments and other expenses.

If this contributes to you missing payments on other reportable credit accounts, those missed payments may affect your credit history.

That is why we encourage you to look beyond the amount available today and consider what your budget will look like when repayment is due.

Does a MyPayNow wage advance affect your credit score?

When you apply with us, we do not make a credit enquiry on your file with a credit reporting agency.

As a result, requesting a MyPayNow wage advance does not create the kind of credit enquiry that can be recorded following some conventional credit applications.

Our wage advance allows eligible customers to access up to 25% of their net pay before their scheduled payday, capped at a maximum advance of $2,000. Eligibility, assessment and approval requirements apply.

During sign-up, we ask for information about your employment and use recent bank transaction data provided through our secure third-party banking provider to assess how much you may be eligible to access.

You can learn more about this process in our How MyPayNow Works guide.

It is important to separate the absence of a credit enquiry from the wider financial impact of using an advance.

An advance still has to be repaid and involves a fee and interest. You should consider whether the repayment will comfortably fit within your upcoming budget before proceeding.

What does a MyPayNow advance cost?

We currently charge:

• a fee equal to 5% of the amount advanced

• interest at 24% per annum on the outstanding balance

• interest for a maximum period of 62 days

For example, if you take a $100 advance and repay it after seven days, the current cost is:

The cost will increase with the amount you access and the length of time the balance remains outstanding.

Your repayment is generally scheduled automatically by direct debit on your repayment date. You can also make a debit card repayment.

Depending on the options available in your account, you may be able to split or delay a repayment. Because interest applies while the balance remains outstanding, taking longer to repay can increase the total interest you pay.

Check the amount and repayment information displayed to you before confirming an advance.

For current pricing and account questions, you can also review our MyPayNow FAQs.

Can a wage advance help improve your credit score?

You should not take a wage advance for the purpose of building or repairing your credit score.

Because we do not make a credit enquiry on your file with a credit reporting agency, our service is not designed as a credit-building product.

More useful ways to support your credit profile may include:

• paying reportable credit accounts by their due dates

• avoiding unnecessary credit applications

• reducing outstanding debt where practical

• regularly checking your credit report for incorrect information

• speaking with your lender early if you think you may have trouble meeting a payment

Australian consumers have the right to request a free copy of their credit report from a credit reporting body every three months.

Checking your own report can also help you understand what information is being recorded and identify anything that may need correcting.

What should you consider before taking an advance?

Not having a credit enquiry does not make an advance cost-free or suitable in every situation.

Before accessing part of your pay early, consider the following questions.

Can I cover essential expenses after repayment?

Start with your expected next pay.

Subtract your advance repayment, fee and estimated interest, then check whether the remaining amount can comfortably cover rent or mortgage payments, groceries, utilities, transport and existing financial commitments.

Is this an occasional cash-flow issue?

Consider why you need the advance.

An unexpected timing mismatch can be different from consistently running out of money before payday.

If you regularly find that your income does not cover your essential expenses, another advance may not address the underlying problem.

Are there lower-cost alternatives?

Depending on the expense, you may be able to:

• use available emergency savings

• delay a non-essential purchase

• ask a bill provider for additional time

• arrange a payment plan

• check whether hardship assistance is available

Comparing the options can help you understand which one is more appropriate for your circumstances.

Do I understand the full repayment?

Look at the total amount you will need to repay rather than focusing only on the amount you receive today.

That includes the advance itself, our 5% fee and the interest that will apply until the outstanding balance is repaid.

Could the repayment affect another payment?

Check what else is due around your scheduled repayment date.

Upcoming rent, mortgage payments, utilities, insurance, subscriptions and existing debt repayments can all affect how much room you have in your budget.

A wage advance brings forward part of your expected income. It should not be treated as additional income.

What if you are experiencing financial hardship?

Our product is not designed for people who are experiencing financial hardship or who would be unable to make the repayments without experiencing financial hardship.

If you are already struggling to cover essential living costs or existing debts, consider seeking support rather than relying on repeated advances.

A financial counsellor can help you understand your options, deal with creditors and work through your financial position. Financial counselling through the National Debt Helpline is free, confidential and independent.

Alternatives to a cash advance

The most appropriate alternative depends on what you need to pay and your overall financial position.

Options you could consider include:

• using available savings

• asking the business you owe for an extension

• requesting a payment arrangement

• speaking with your electricity, telecommunications, insurance or other service provider about hardship support

• checking whether the purchase or expense can be delayed

• reviewing subscriptions and discretionary spending

• asking your employer whether it offers its own payroll advance arrangements

• seeking help from a financial counsellor

Considering alternatives is not about assuming that one option will always be better than another. It is about understanding the cost and effect of each choice before committing your future income.

Frequently asked questions

Does checking my own credit score lower it?

Checking your own credit report or credit score is not the same as making an application for credit and does not create the type of conventional credit application enquiry discussed in this article.

You can generally request a free copy of your Australian consumer credit report every three months.

Does every cash advance provider conduct a credit check?

No.

Cash advance providers and credit providers can use different assessment methods. Check the provider's terms, privacy information and FAQs so you understand whether a credit reporting body will be contacted.

Does MyPayNow check my credit score?

We do not make a credit enquiry on your file with a credit reporting agency.

We still assess whether you meet our eligibility and assessment requirements. Approval is not automatic.

Will using MyPayNow improve my credit score?

You should not use our wage advance service as a way to improve your credit score.

Our product is designed to provide eligible customers with short-term access to a portion of their upcoming wage, not to establish a positive credit history.

Can missed payments affect future credit applications?

Missed payments on reportable credit accounts can affect your credit report.

A future lender may also consider other information about your financial circumstances when assessing an application, so it is important to consider your overall budget and existing commitments.

How long does repayment history stay on a credit report?

Repayment history information can remain on an Australian credit report for two years.

Defaults generally remain for five years, while serious credit infringements can remain for seven years.

The bottom line

A cash advance does not automatically affect your credit score.

The potential impact depends on the type of service, whether the provider conducts a credit enquiry and what information may be reported to a credit reporting body.

When you apply with us, we do not make a credit enquiry on your file with a credit reporting agency. However, accessing part of your pay early still comes with a repayment commitment, a 5% fee and interest at 24% per annum on the outstanding balance, capped at 62 days.

Before requesting an advance, consider how repayment will affect the money available from your upcoming income and whether another option may better suit your situation.

You can review how our wage advance works, check our current FAQs and costs, and consider whether accessing part of your pay early is appropriate for your circumstances before proceeding.

The information provided in this blog is for general informational purposes only and does not constitute financial advice. It is not tailored to the specific circumstances of any individual. Before acting on the information, you should consider whether the information is appropriate for you having regard to your objectives, financial situation and needs.