Most likely not, because the MCA was never reported to the credit bureaus and the UCC Lien was filed the day you were funded. The credit damage tends to come from waiting until you're behind.
Does Getting MCA Help While You're Still Current Hurt Your Credit?
According to Nav, most MCA companies do not report to the credit bureaus.
When you were funded, the MCA company most likely filed a UCC-1 financing statement. According to Nav, active filings appear on your Dun & Bradstreet, Experian and Equifax business credit reports but typically do not affect your business credit score.
Where Does Your MCA Show Up Right Now?
In all likelihood, your MCA appears in one public place: your state's public index of UCC filings. Under the Fair Credit Reporting Act ("FCRA"), only individuals qualify as consumers. See 15 U.S.C. 1681a. So a report on your company is not a "consumer report." But if you signed a personal guarantee, your personal report may show the funder's inquiry, because the FTC's staff report says a creditor may pull a report on "an individual who will be personally liable for the debt." Many funders qualify you with a soft pull, which will not affect your FICO® Score.
How Getting MCA Help Will Likely Affect Your Credit
| Step | Business credit file | Personal consumer credit report | Public record |
|---|
| Request to reconcile (while you're still current) | No new information | No new information | No new information (UCC-1 financing statement already filed) |
| Request to modify your payments with your funder | No evidence this is reported | No evidence this is reported | No new public record |
| Obtain new loan to refinance or consolidate your MCA | New relationship with potential lender | Most likely hard inquiry | Possibly new UCC-1 financing statement |
| Default on MCA and suffer judgment after lawsuit | Judgments are commonly reported | Judgments no longer reported as of July 2017 | Judgment will be filed in the court where the lawsuit was filed |
| File bankruptcy for your business entity | Likely reported | Only if you file personally | Available on PACER |
You can also view the potential effects of settling your MCA debt on your credit.
Does Asking Your MCA Company to Reconcile or to Reduce My Payments Hurt My Credit?
Asking your funder to reconcile under the reconciliation clause is not a default, because you are exercising your contract right to have your remittance matched to your actual receivables. Some reconciliation websites say a lower holdback "can signal to other lenders" that you're under a distress arrangement but do not cite where that would be reported. It is more likely that a future lender will read your bank statements and see smaller debits.
How Will Waiting Until I Default Hurt My Credit?
Waiting mostly affects your personal credit through side effects. The MCA likely does not appear as a trade line on your personal credit report, so your payments on it are not reported. According to myFICO, 35% of your FICO® Score is based on your payment history. But if you use personal credit cards to cover the daily debits, you raise the amount you owe, which accounts for 30% of your FICO® Score, and when you can't make the card payments, your payment history takes the hit.
The other problem is that once you default there is a race to accelerate, sue and get a judgment (which may involve a levy on a business bank account or a confession of judgment in a state that still allows commercial confessions, like Pennsylvania), and if a frozen account makes payroll or vendor payments bounce, then maybe (but only maybe) the business score takes a hit.
Judgments will not be reported on consumer credit reports, whatever some law firm sites say. See the CFPB's study of public records from 2018. The CFPB found that civil judgments were no longer in any consumer files after July 1, 2017. They remain public court records, though, and lenders still run judgment and lien searches.
Why Does Your Personal Score Matter for a Refinance?
You will need to show your personal credit report to refinance or consolidate an MCA. OnDeck lists a 625 FICO score, one year in business and $100,000 in revenue. According to NerdWallet, other options include Fora (min 570 FICO), Bluevine (min 625 FICO) and SBA 7(a) loans (min 650 FICO). Carry the debits on personal cards long enough to fall below those minimums and refinancing may be off the table. And if you took out another MCA to pay the first, you may have two open UCC-1's, and according to Nav, as few as 2 open filings can get you declined.
What Should You Check While You're Still Current?
- Pull your personal credit reports to see if funders pulled them or added a tradeline.
- Review your personal guaranty. The FTC sued RCG Advances for allegedly promising "no personal guaranty" online while its contracts included one (FTC v. RCG Advances LLC, FTC Matter No. 192-3252), and a performance guaranty can be used against you if the funder alleges a breach.
- Search your Secretary of State's UCC index to see how many open UCC's you have.
- Put any reconciliation request in writing, with your receivables attached.
Frequently Asked Questions
If my funder gets a judgment against me, will it show on my Experian, Equifax or TransUnion report?
No. Since July 1, 2017, the effective date of the National Consumer Assistance Plan, civil judgments are no longer reported on consumer credit reports at the three nationwide credit reporting agencies. They are still public court records, and lenders run judgment and lien searches.
Does a business bankruptcy go on my personal credit report?
Only if you file personally, although an LLC or corporate bankruptcy is listed in PACER. Federal law prohibits reporting a bankruptcy older than 10 years from the date of entry of the order for relief.
How long would negative items stay on my personal report if I wait too long?
Collections or charge offs may be reported for 7 years, and that period begins 180 days after the start of the delinquency that led to the charge off or collection. These limits do not apply to a credit transaction of $150,000 or more, such as an SBA or commercial real estate loan.
Can a relief company tell me to stop paying and promise it won't touch my credit?
They can say it, but since the 2024 amendment to the FTC's Telemarketing Sales Rule, they cannot misrepresent the results of a debt relief service or the impact on collection efforts, even in a business to business call. Review your contract and any guaranty you signed before acting.