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does universal credit affect your credit score?
does universal credit affect your credit score?

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Does Universal Credit Affect Your Credit Score?

Your credit score won't be significantly impacted if you have Universal Credit. 
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Universal Credit is a benefit used by millions of Britons. In fact, during March and April of this year, more than 1.5 million claims were made.

The UK Government urged all UK residents to apply for support through Universal Credit and people who had never used the benefits system before had to quickly pick up on how it worked. 

Many people questioned whether credit ratings were also impacted by Universal Credit in addition to their lives being upended.

The good news is that your credit score won't be significantly impacted if you have Universal Credit. 

However, it might impact any credit applications you submit, including those for a new credit card, a new personal loan, or a mortgage. Continue reading to learn more.

What is Universal Credit?

Universal Credit is a benefit that is available to anyone of working age who are unemployed or have a low income. Because it is a means-tested benefit, the Department for Work and Pensions (DWP) will evaluate your situation to determine how much Universal Credit you require and how much money you need to live on.

To qualify for Universal Credit you must be:

  • 18 or over

  • Under State Pension age

  • Live in the UK

The amount of Universal Credit is not fixed. Instead, it is "means tested," which means that the DWP considers your particular circumstances before determining the amount of Universal Credit you are eligible for.

As part of The Welfare Reform Act, Universal Credit was introduced in 2012. It aims to replace some of the previously available benefits: 

  • Housing Benefit

  • Child Tax Credit

  • Income Support

  • Income-based Jobseeker’s Allowance

  • Income-related Employment and Support Allowance

  • Working Tax Credit

How long do payments take?

Your first Universal Credit payment typically arrives after five weeks.

This period consists of an evaluation period of one month, and the additional seven days it takes for the payment to process and arrive in the claimant's account.

Although the benefit is typically paid once per month, you may receive payments once or twice each month in Scotland.

Can I apply for an advance?

You can request an advance if you need money right away while you're waiting for your first Universal Credit payment. Here are the basics:

  • When you submit your Universal Credit application, you can request an advance.

  • The total of your first Universal Credit payment is the most you can receive as an advance.

  • When you get your first Universal Credit payment, you will also be required to repay a portion of your advance.

  • The advance does not have to be repaid all at once, but it must be done so within a year.

You might be eligible to apply for a Budgeting Advance if you have been receiving Universal Credit for longer than six months.

Will lenders see if I'm on Universal Credit?

Your source of income doesn't appear on your credit report.

Therefore, simply looking at your credit report won't show that you are receiving Universal Credit benefits. However, lenders will require proof of income before considering whether or not to approve a loan application.

As a result, they will most likely notice that you are receiving Universal Credit.

Does Universal Credit affect my credit rating?

Your credit score won't be impacted if you are applying for Universal Credit.

Your borrowing history, the amount of debt you have, and your track record of on-time debt repayment are all factors in determining your credit score or rating.

Because Universal Credit is a portion of your income, it won't show up in your credit history and won't lower your credit score.

Will benefits be visible on my credit profile?

There is no need for any benefits you claim to show up on your credit record because it focuses on your debts rather than your income.

Details of any credit agreements you currently have or have had in the past will be shown on your credit report. This means that it includes any additional credit you may have as well as your mortgages, credit cards, loans, and overdrafts.

Does Universal Credit affect mortgage applications?

Although claiming Universal Credit won't show up on your credit report, it can nevertheless have an impact on your ability to obtain a mortgage.

A bank or building society will consider your income when evaluating your mortgage application to see whether you can afford to repay the loan. If you are receiving Universal Credit, it is probably because your income is low, which means you might not pass the affordability criteria required by mortgage lenders.

That does not imply that your Universal Credit is preventing you from obtaining a mortgage. Your mortgage application may be impacted by the fact that you are claiming Universal Credit due to your financial situation.

By reviewing a lender's eligibility requirements before submitting your application, you can prevent having your mortgage application rejected, which could hurt your credit score.

Will benefits affect my loan or credit card applications?

Although receiving assistance has no impact on your credit score, it could make it more difficult for you to get a loan or a credit card.

This is because it is likely that you have a low income if you are claiming benefits. That can indicate that you don't make enough money to qualify for the majority of credit cards or loans.

However, receiving benefits does not necessarily prevent you from applying for a loan or credit card. There's no reason why your benefits should have an impact on your application if you have a solid credit history and the means to make the repayments.

Can I get finance on Universal Credit?

When you apply for a loan or credit card, the lender will evaluate your application based on their own standards. They often take into account a lot of things, like your income and current debt, for instance.

In general, if you have a good credit history, a high credit score, and a stable income, applying for Universal Credit shouldn't have a significant impact on your ability to obtain financing.

Some lenders, however, specialise in offering credit to people with poor credit or low incomes. Just keep in mind that there are no assurances of acceptance because the minimum income requirements will still be in place. Additionally, if your credit history is bad, you can have to pay higher interest rates.

How do I improve my credit score?

Here are a few ways you can improve your credit score:

  • Enrol in the electoral roll to verify your address with lenders.

  • Paying your bills on time will improve your credit score because it demonstrates that you are a trustworthy borrower.

  • Reduce your debt - Potential lenders will be turned off if you are close to your credit limit because this indicates that you may be having financial difficulties.


Receiving benefits will not impact your creditworthiness, but a low income could.

There’s no point in refusing to claim universal credit to increase the chances of being approved for a loan. This will actually harm your chances, as your income will be reduced.

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