I have a cracking in my upper back. I stretch alot (backbends, ect.)i have stopped doing so due to this. I have no pain. Could there be permanent damage?

Not likely. Popping within the joints is most likely caused by cavitation within the joint. This is when small cavities of partial vacuum form in the synovial fluid and then rapidly collapse, producing a sharp sound. This does not damage the joint, just equalizes pressure.