Loans for people on benefits

Understand what help is available if you’re on benefits

Representative 39.9% APR. ClearScore is a credit broker, not a lender, 18+, T&Cs apply

Check your credit score, for free

See what lenders see with your free credit report

Compare as many offers as you like without harming your credit score

Compare your personalised loan offers

1. Sign up

Get your credit score and report for free, forever. And log in to see your personalised offers.

2. Compare your offers

The offers you see are tailored to your score.

3. Apply for your loan

We’ll tell you what your approval chance is, so you can apply with confidence.

Tell us what you’re looking for and we’ll show you personalised offers you might be eligible for.

Can you get a loan while on benefits?

You could get a loan from a specialist lender

You could still get a loan if you’re on benefits. Some lenders specialise in loans for people on benefits, or with a bad, no, credit history.

It’s important to think about how much money you need

Because loans are a form of debt, you need to be confident you can pay it back, in full and on time. Loans come with interest rates (also known as APRs or annual percentage rates), so make sure you understand how much you’re paying back every month and in total.

Keep an eye on your credit score

Your credit score is made up of things in your credit report, like the number and type of accounts you have, how much of your available credit you’ve used, your payment history and the length of your credit history.

Keeping an eye on your score and report can give an idea of when it’s a good time to apply for credit. Because a better score could mean better offers.

Improve your credit score with ClearScore

See what’s impacting your score

Missed payments, new accounts, hard searches and more – we’ll give you a heads-up so you can understand what's making your score move.

Get easy tips to improve it

Every week, we’ll give you up to 10 insights to help you get to grips with your report. They’re filled with easy tips that could help improve your score and get it back on track.

Feel more confident about your credit choices

From lower interest rates to higher credit limits or loan amounts, a higher credit score can give you access to better offers in the future.

We’ll show you offers tailored to you – and order them based on what might be right for you.

Get your credit score for free, forever.

The different types of loans you might be able to get while on benefits

There are a few different types of loans you might be able to access if you’re on benefits. It’s important to find the right one for you.

Personal loans

A personal loan – also called an unsecured loan – is a one-off sum of money that you pay back over an agreed term (number of months). Comparing your offers is a great place to start – it will give you a better idea about what interest rates and terms are available to you.

Guarantor loans

If a friend or relative meets your lender’s criteria, they could help you get a guarantor loan by promising to make the repayments (as a last resort) on your behalf. If you’re unable to make the repayments, the loan would become the guarantor’s responsibility and would transfer to their credit report.

Secured loans

A secured loan is usually for homeowners – you use your home as security to get a large amount of money. But, that also means you risk losing your home if you’re unable to make the repayments.

Get free help with your debt worries, from StepChange

You’re not alone. StepChange helps people with debt every day

If you've got money worries, know that you're not alone. It's a lot more common than you think. But it's important not to ignore these things and to seek support if you need it.

We’re working in partnership with StepChange to give you access to their free debt advice and support.

It won’t affect your credit score

StepChange won’t share anything you tell them with us, or a credit search on you.

Alternatives to a loan

There are some other options out there if you’re not sure a loan is right for you.

Credit Unions

Credit Unions are not-for-profit. There’s a cap on the amount of interest they can charge (usually less than 50% APR). So, if there’s one near you, you could see if they’d be able to lend you the money you need.

Universal Credit advances

If you’re thinking of applying for Universal Credit, you’ll usually receive your payments monthly. But you can ask to have the first payment sent to you early (in advance) if you’re struggling to pay for things like food or rent. You’ll pay back the advance through deductions on your remaining Universal Credit payments. You can look into Universal Credit advances on the Government website.

Budgeting Advances

If you’re already getting Universal Credit, you might be able to get a Budgeting Advance. Your Universal Credit payments will be lower than normal while you pay back the advance – you’ll be told what that will look like.

The benefits of taking out a loan

If you’re confident you could make the repayments on time and in full, a loan could help you with life’s unexpected expenses.

A loan can give you access to the money you need for things like home repairs, debt consolidation, or big purchases.

You can build your credit history, which can make it easier to access credit in the future (because you’ll have a track record of repaying what you borrow).

You can improve your credit score by paying back the loan on time and in full.

The risks of taking out a loan

It’s important to understand that loans are a type of debt. Knowing what you can afford to repay every month for the full loan term is important.

You might be offered high interest rates – which increases the total amount of money you’ll need to repay.

If you don’t repay what you borrow on time, the lender could take steps to recover the money you owe them.

Your credit score can be impacted by the amount, and types of, credit (loans, credit cards or car finance, for example) you have. It’s a good idea to wait about 6 months between credit applications so your score can improve.

The application process

If you’re applying for a loan, the process is the same for everyone. You can start by comparing your offers and understanding what interest rates, loan terms and loan amounts are available to you.

Compare your offers

The offers you’ll see are tailored to you.

We’ll ask you for some information like how much you’d like to borrow and for how long, what you plan to use the loan for and what your total monthly spending is.

Apply for the loan

The lender will usually ask you to give them some more information and then they’ll carry out a hard search on your credit history.

Wait for the money to arrive

If you’re approved for the loan, the lender could send you the money within a few days. You’ll usually have a cooling-off period –  it's a good idea to check with the lender how long you'll have to change your mind.

The process is different for Credit Unions, Universal Credit advances or Budgeting Advances

Search for your local Credit Union and apply directly with them. Or, you can apply for a Universal Credit advance through your Universal Credit account. And, to apply for a Budgeting Advance, you should go to your local Jobcentre Plus work coach.

Which benefits count as income?

When you start comparing loans, we’ll ask you about your income to get a better idea of what you could be eligible for. Some benefits count as income – and you can find out more on the Government website.

Which benefits don’t count as income?

Some benefits aren’t considered income. You can find out more about tax-free and taxable benefits on the Government website.

How much can you borrow?

The amount of money you can borrow depends on things like your credit history. Lenders will use that information to determine how much they’re willing to let you borrow.

That’s why comparing offers before you apply is a great way to see what you’re likely to be eligible for.

Does a personal loan affect your Universal Credit?

Universal Credit is a regular payment for people who are on a low income or unemployed. It’s replaced some benefits like Child Tax Credit, Housing Benefit and Working Tax Credit.

If you take out a loan, sign into your Universal Credit account and report a change of circumstances. Depending on the loan, and your personal circumstances, your Universal Credit might be affected.

You can find out more about Universal Credit and how it works on the MoneyHelper website.

Where to go for debt advice

Support to keep you moving forwards

Our trusted partners are here to give you that extra bit of help - just like they have with thousands of others in a similar position. So, whether you'd like some advice or need help creating a plan, rest assured we’ll ensure you keep moving forward.

Take a free money health check with StepChange

Find out how StepChange could help with your debt in just a few minutes. 

Take the money health check online.

Take the money health check online.

Start looking for your lost money with Gretel

Reclaim your lost pensions, find old investments and check for savings.

Find your lost money with Gretel.

Frequently asked questions

Other types of available loans

There are lots of loans out there – it’s important to find the right one for you.

Guarantor loans

Guarantor loans are usually for people with a bad, or no, credit score because someone else in the agreement – the guarantor – meets the lender’s criteria and is responsible for repaying the loan if you can’t.

Secured Loans

secured loan is usually for homeowners – you use your home as security to get a large amount of money. If you can’t make the repayments, you risk losing your home.

Loans for bad credit

Loans for bad credit are designed for people who have a bad credit score or a poor repayment history, but these loans can come with high interest rates.

Debt Consolidation Loans

Using a debt consolidation loan to pay off your current debt could help you focus on one, more manageable payment.

Personal Loans

personal loan – also called an unsecured loan – is a one-off sum of money that you pay back over an agreed term (number of months).

Car Finance Loan

With a car finance loan, there are a few different ways to pay for a new car, like UPL or hire purchase.