Can I get a loan while receiving Universal Credit?
Receiving Universal Credit can make it harder to know whether a new monthly repayment will be comfortable, especially if your payment changes or you have several household costs due at once. It does not automatically mean you cannot check whether you are likely to be accepted for a personal loan. 118 118 Money looks at each application individually, including your income, regular outgoings, credit history and affordability.
We do not offer a guaranteed loan for people receiving Universal Credit. A sensible first step is an eligibility check, which gives you an indication of whether you are likely to be accepted before you make a full application. It will not affect your credit score, so you can consider your options without committing to a loan.
Before you borrow, make sure the repayment works with the money that reaches your account in an ordinary month. A personal loan is a serious commitment, so it should leave room for essentials and continue to feel manageable for the full repayment term.
Start with the payment you actually receive
Universal Credit can change when your circumstances change. Earnings, household details, advances and deductions can all affect the amount you receive. When you are deciding whether a loan payment fits, use the amount that is realistically available after those changes, rather than an amount you hope to receive in a better month.
Check recent statements. Looking at several recent payments can help you see what usually reaches your account and when it arrives.
Keep deductions in view. If money is already taken from your payment, make sure a new fixed repayment still leaves enough for your day-to-day needs.
Use accurate details. An honest picture of your income and spending gives a more useful affordability decision.
Take account of the dates when bigger costs fall too. School uniforms, repairs, annual insurance and seasonal energy bills can make one month tighter than the one before it, even when your usual payment has not changed.
If you receive wages or other income alongside Universal Credit, include those amounts carefully too. Our guide to understanding your Universal Credit payment explains some of the factors that can affect it.
Check lower-cost support before borrowing
A loan is not always the first or best answer for an unexpected cost. If you need help with a specific essential item or expense, check whether support through Universal Credit may be available first. A Budgeting Advance can be an option for certain one-off costs, subject to eligibility and repayment from future Universal Credit payments.
The official Budgeting Advance guidance explains what it can be used for and how repayment works. Read it before taking out credit, and include any future deduction in your budget. A smaller borrowing need, or another source of support, can put less pressure on your month-to-month finances.
Test the repayment against your whole month
Start with the costs that cannot be missed, such as rent, food, energy, travel, childcare and council tax. Then add existing credit payments, phone contracts, subscriptions and any regular support you provide to someone else. Compare those commitments with the income you can depend on after your Universal Credit payment arrives.
It is easy to focus on the amount you could borrow, but the monthly payment is what you will need to manage again and again. If the repayment only works by missing another bill, using an overdraft or cutting back on essentials, it may be too much pressure. Waiting, borrowing less or finding another solution may be the better decision.
Our loan calculator can help you compare likely monthly repayments over different terms. A longer term can reduce the monthly payment, but it may increase the total amount you repay.
Know what an eligibility check tells you
An eligibility check gives an indication of whether you are likely to be accepted based on the information you provide. It does not affect your credit score and lets you see whether continuing is worth considering before you make a full application.
If you choose to continue, you will complete a full application and a final decision will be made after a fuller review. Eligibility does not guarantee an offer. If approved, the amount, interest rate and repayment term available may depend on your individual circumstances.
Take time to read the terms before accepting any agreement. The right decision is one that works for your budget, not simply one that solves today's immediate problem.
Borrow for a clear, manageable purpose
Borrowing is easier to assess when it has a specific purpose, such as an essential repair, replacing a household item or spreading the cost of a planned expense. Decide what you need before you apply and consider whether a smaller amount would solve the problem without creating more pressure later.
It is worth pausing if you would use a loan to cover everyday living costs, rent, food, overdue bills or payments you are already struggling to make. Another repayment can make a difficult situation worse. Speaking with the company you owe, reviewing your budget or getting free, independent debt advice may be a better first step.
When a personal loan may not be the right answer
Credit costs money. If your Universal Credit payment has fallen, your essential bills already exceed your income or you are missing repayments, taking out a new loan may add to the pressure. Addressing the immediate problem first can be more helpful than relying on a repayment that may become unaffordable.
Our money guidance can help you consider your next step. For a broader overview of how personal loans work, visit our loans page.