If, like many others, you have spent much of your life working to build up your credit score but are now receiving government support, it’s understandable that you’ll want to know precisely how Universal Credit might affect your credit score.
In this article, we’ll explain Universal Credit and whether it affects your credit score. We'll also answer the important question, can you get car finance on universal credit? We’ll also provide valuable insights into improving your credit score. So, let’s dive in.
Universal Credit is a support allowance the UK government provides to help those on low incomes manage their living costs. It is designed to support people of working age who are struggling financially, including those who are out of work, unable to work, or in work with a low income.
To be eligible for Universal Credit, you must meet specific criteria:
Universal Credit Replaces Several Benefits
Universal Credit has replaced several benefits and tax credits, streamlining the support system. These benefits include:
This shift in benefits systems means that, unless explicitly stated otherwise according to your circumstances, you can no longer claim under these previous benefit schemes.
Your credit score is sometimes called your credit rating. It is a three-digit number that scores your credit history. It plays a really important role when applying for car finance.
Different UK credit reference agencies (CRAs), including Experian, Equifax, and TransUnion, use different scales to define credit ratings. A higher score typically indicates responsible credit management. To find out more on credit scores, check out our blog: 'Credit Checks'.
The simple answer is no; claiming Universal Credit does not affect your credit score. Your credit score is primarily determined by factors such as your borrowing history, outstanding debts, and ability to make timely and complete repayments. It is not influenced by the source of your income.
In other words, whether you are self-employed, have a part-time job, or receive Universal Credit, you can still build and maintain a good credit score by consistently paying your bills in full and on time. If you are in a position where you have bad credit, there are lots of steps you can take to improve it.
No, Universal Credit, or any other source of income for that matter, does not appear on your credit report. Your credit report focuses on your debts and credit agreements, not your income sources.
However, it’s important to note that lenders may request proof of income when applying for finance. While Universal Credit won’t show on your credit report, you may need to provide your award notice or other forms of proof to confirm that you are receiving Universal Credit.
There’s a common misconception that receiving benefits like Universal Credit automatically disqualifies you from getting car finance. However, eligibility for car finance varies from lender to lender, and each has its own criteria.
When considering your car finance application, lenders assess various factors to ensure that the finance they offer is affordable. Some lenders will not accept you if you receive benefits.
Building and maintaining a good credit score is essential for securing favourable financial terms. Here are some tips to help you improve your credit score:
Check out our blog here for further information on improving your credit score.
Receiving Universal Credit does not impact your credit score. Your credit history, outstanding debts, and repayment behaviour determine your creditworthiness. While Universal Credit won’t appear on your credit report, lenders may request proof of income when applying for financial products.
At Marsh Finance, we understand the importance of reliable transportation. We consider Universal Credit as additional income and have straightforward criteria to help you get the car finance you need. Applying with us is fast and efficient, and you can find out if you’re pre-approved on the same day without impacting your credit score.
Don’t let misconceptions about Universal Credit hold you back. Focus on managing your finances responsibly, and your credit score will reflect your creditworthiness. If you’re in need of car finance, consider Marsh Finance as your trusted partner on your financial journey. Click here to apply with us today and take the first step towards owning the vehicle you need.