Pre-settlement funding (also known as lawsuit funding or legal funding) provides crucial financial support for plaintiffs awaiting a lawsuit settlement. It helps cover everyday expenses and bills during the legal process, offering relief when compensation is still pending.
Naturally, many people wonder how pre-settlement funding might affect their credit.
A common question applicants have is: Will this show up on my credit report or lower my credit score?
Will Pre-Settlement Funding Affect My Credit Score?
The short answer: No. Pre-settlement funding does not affect your credit score and isn’t reported to credit bureaus like Experian, Equifax, or TransUnion. It’s a non-recourse cash advance based on the strength of your case — not your credit — meaning your credit file stays completely unaffected.
This guide explains why pre-settlement funding doesn’t impact your credit—according to both legal standards and industry best practices—and answers the most common questions applicants have about credit checks, credit reporting, and repayment obligations.
Is Pre-Settlement Funding Reported to Credit Bureaus?
No. Pre-settlement funding is structured as a non-recourse advance, meaning repayment is only required if your case results in a settlement or judgment. This arrangement is not classified as consumer debt under most state and federal lending laws.
Because it’s not debt in the traditional loan sense:
- Legal funding companies do not submit information to credit reporting agencies.
- No new “account” appears in your credit file.
- There is no monthly reporting of balances, payments, or delinquencies.
Legal Basis
States generally treat consumer legal funding as a non-recourse purchase, not a loan.
For example, in Missouri, the law clearly states that a compliant legal funding contract is not a loan and isn’t subject to lending laws (RSMo §436.564).
Under the Fair Credit Reporting Act (FCRA), there’s no legal duty to report; reporting duties apply only to companies that voluntarily furnish data to credit bureaus.
Can Pre-Settlement Funding Lower My Credit Score?
No — getting pre-settlement funding will not lower your credit score.
Credit scores are calculated from:
- Payment history
- Amounts owed (credit utilization)
- Length of credit history
- New credit (inquiries)
- Credit mix
Pre-settlement funding does not interact with any of these factors because:
- It’s not revolving or installment credit.
- There are no monthly payments to record.
- There is no default reporting if your case loses — repayment is waived entirely.
Learn more in our guide: Does Pre-Settlement Funding Require Monthly Payments?
Example:
If you receive $10,000 in legal funding and your case ultimately fails, the contract ends with no repayment required and no entry on your credit file. Compare that to a $10,000 bank loan — missed payments would be recorded as late, damage your score, and possibly trigger legal collections.
Do Legal Funding Companies Perform Credit Checks?
Typically, no. Most reputable pre-settlement funding companies base approval solely on:
- Strength of your case
- Estimated settlement amount
- Documentation from your attorney
This means they do not need — or request — your credit history.
Soft vs. Hard Credit Inquiry
- Soft inquiry: A background review that doesn’t affect your score and isn’t visible to prospective lenders.
- Hard inquiry: A full credit pull that can lower your score by a few points and is visible to lenders for up to two years.
In the rare instance a legal funding company does check credit, it’s almost always a soft inquiry — meaning zero impact on your credit score.
What’s the Difference Between Pre-Settlement Funding and a Loan for Credit Impact?
The table below compares pre-settlement funding, personal loans, and credit card cash advances to show how each option affects your credit score, reporting, and repayment obligations.
Credit Impact Comparison: Pre-Settlement Funding vs. Personal Loan vs. Credit Card Cash Advance
| Feature | Pre-Settlement Funding | Personal Loan | Credit Card Cash Advance |
|---|---|---|---|
| Legal classification | Non-recourse advance | Debt obligation | Revolving credit |
| Credit check required? | No / soft inquiry | Yes (hard inquiry) | Yes (hard inquiry) |
| Reported to bureaus? | No | Yes | Yes |
| Repayment obligation if case fails | None | Full balance owed | Full balance owed |
| Risk to credit score | None | Possible negative marks | Possible negative marks |
Key difference: A traditional loan or cash advance creates enforceable repayment regardless of circumstances, and any missed payments are reported, damaging your credit. Legal funding ends with your case outcome — no collection activity, no damage to your score.
If I Don’t Win My Case, Can the Legal Funding Company Hurt My Credit?
No. If you lose your case, the legal funding company cannot damage your credit or pursue repayment. Pre-settlement funding is a non-recourse funding agreement, meaning repayment only applies if you win or settle.
Here’s what that means:
- No collections: The company can’t send your account to debt collectors.
- No liens or wage garnishment: They have no right to your property or income.
- No credit reporting: Nothing is added to your credit file or history.
These legal safeguards ensure that losing your case never affects your credit or financial standing.
Will Pre-Settlement Funding Affect My Ability to Get Future Loans or Lines of Credit?
No. Pre-settlement funding does not directly affect your ability to get future loans or credit. It isn’t reported to credit bureaus, and no inquiry or balance appears on your credit file, so lenders can’t see the transaction.
However:
- Indirect impact: Using the funds to pay overdue bills can actually improve your credit profile over time.
- Disclosure: You don’t need to disclose legal funding unless a lender specifically asks in a financial form.
Is Pre-Settlement Funding the Same as a Cash Advance?
No. Pre-settlement funding is not the same as a cash advance, and the difference matters for your credit.
Here’s the difference:
- Cash advance: Borrowed against your credit card limit, increases credit utilization, and must be repaid with interest. Late or missed payments can lower your credit score.
- Pre-settlement funding: Based solely on your pending lawsuit’s potential value. It isn’t linked to your credit cards, isn’t reported to credit bureaus, and has no impact on your credit score.
In short, pre-settlement funding offers quick access to cash without risking your credit health.
Scenario Analysis for Clarity
Scenario A: Loan Application
You apply for a personal loan:
- Bank makes a hard inquiry → credit score drops slightly.
- Loan appears on report → affects credit utilization & mix.
- Missed payments → late marks damage score.
Scenario B: Pre-Settlement Funding
You apply for legal funding:
- The company evaluates your case via your attorney → no bureau involvement.
- No impact on utilization, payment history, or inquiries.
- Case fails → obligation ends, no change to credit score.
Outcome: Only Scenario A touches your credit report or credit score.
As you can see, legal funding stays completely separate from traditional credit systems.
Closing Key Points
- Pre-settlement funding is credit-neutral.
- No bureau reporting, no hard inquiry in standard practice.
- Non-recourse structure means no personal liability if your case fails.
- Strong option for plaintiffs who need immediate help without jeopardizing their credit profile.
Helpful guide: 15 Alternatives to Lawsuit Loans
Common Questions About Whether Pre-Settlement Funding Affects Your Credit Score
Is pre-settlement funding reported to credit bureaus?
No. Pre-settlement funding is not reported to any credit bureau, including Experian, Equifax, or TransUnion. That’s because it’s structured as a non-recourse cash advance, not a loan or debt under federal or state lending laws. Since no repayment is owed if your case doesn’t settle, there’s no credit account or balance to report — meaning your funding agreement remains completely off your credit file.
Can legal funding lower my credit score?
No. Legal funding has no negative impact on your credit score because it doesn’t involve traditional loan elements like monthly payments, interest accrual, or default reporting. Credit scores are based on factors such as payment history, utilization, and new credit inquiries — none of which apply here. Even if your case doesn’t succeed, the funding is forgiven, and no negative mark appears on your credit report.
Do lawsuit funding companies run credit checks?
Most reputable lawsuit funding companies do not perform credit checks. Instead, they evaluate your eligibility based on the strength and potential value of your lawsuit. In rare cases where a credit review is needed for identity verification, it’s done through a soft inquiry, which does not affect your credit score or appear to future lenders. Approval is determined by your attorney’s case documentation, not your credit history.
Relevant read: Do Pre-Settlement Funding Companies Require Credit Checks?
Get Credit-Safe Pre-Settlement Funding Today with Express Legal Funding
Waiting for your settlement doesn’t have to strain your finances. At Express Legal Funding, we provide risk-free, non-recourse pre-settlement funding that never affects your credit score. There are no credit checks, upfront costs, or hidden fees — just fast, transparent financial support when you need it most.
🟢 Apply online or call us now at (888) 232-9223 to get cash today and stay financially secure while your case moves forward.
