How to Get Loans on Benefits with Bad Credit Scores?

Ailsa Adam July 9, 2024

When you’re already dealing with the challenge of relying on government benefits, having bad credit can feel overwhelming to face. Not dealing with it though means missing out on financing options if you do need them though. So addressing credit issues is important long term.

With poor credit scores, there’s often a sense you have to take any loan offered, regardless of how unfavourable it might be, just because others turned you down. However, exploring all available lending resources sensibly and being an informed borrower is key – even with limited options.

It takes patience digging out from credit struggles or financial hardship, but a careful approach puts you back in the driver’s seat. Never allow desperation or discouragement to keep you from seeking reasonable solutions. If one path doesn’t work out favourably, just breathe deep and stay determined to find better alternatives.

According to the latest data, there are over 22 million people in the UK receiving some form of benefits as of February 2023.

Loans on Benefits with Bad Credit in the UK

Being on government benefits can make getting a loan tricky. But sometimes, financing is necessary when you’re relying on assistance programs. Reasons someone may need a loan while on benefits include:

  • Paying the rent or repairing the car you rely on for medical trips
  • Affording special equipment not covered by PIP, like wheelchairs
  • Dealing with an unexpected expense between benefit payments

Even if your credit score has taken a hit after going on disability or losing your job, lenders still recognise the need for emergency borrowing in tough situations.

That’s why options like payday, guarantor, and benefit-friendly instalment loans exist despite bad credit. They provide a lifeline to critical funds when your only income source is UK benefits. Necessary purchases or urgent costs don’t pause just because you’re between government payments.

Targeting lenders who work with your situation is key.

Types of Loans Available in the UK

Getting money when you need it can be hard. It is especially if your credit score is not great or you get government money to live. But there are some loans for bad credit and on benefit that might work for you.

Loans You Pay Back Fast

These loans give you cash quickly. But you must pay them back fast, usually in 30 days or less. And they have very high interest rates. This makes it hard to pay off.

Loans You Pay Slowly

With these loans, you get more time to pay back the money you borrow. That makes it easier. The interest rates are usually lower too.

Loans with a Helper

With these, a friend or family member promises to pay the loan if you can’t. This helps you get the loan since someone else will vouch for you.

Loans from Non-Profits

These non-profit groups offer loans to members. The rates are affordable. And they may work with borrowers having money issues.

Eligibility Criteria for Loans in the UK

Trying to get a loan can be tricky when you’re on government benefits and have bad credit. But some options are out there if you meet the right criteria.

What lenders look to see that you have enough regular income coming in each month to make your loan payments? For people on benefits, this means showing:

  • Steady benefits like disability or housing assistance. The amounts matter – lenders often have a monthly minimum.
  • Legal UK residency and a UK bank account. Your age must be at least 18 years in most cases.
  • A permanent UK address so they can contact you.

Meeting these requirements gives lenders confidence you can handle repaying the loan. It helps boost your chances of getting approved for the financing you need. The key is showing you have a reliable income, even if it’s from government assistance.

Finding Lenders Specialising in Bad Credit

When your credit isn’t great, the big banks usually turn you down for a loan. But there are other places to check that offer financing options even with very bad credit scores. Here are some options to explore:

Check Online

Many online lenders now specialise in loans for very bad credit loans with no guarantor from a direct lender. They have flexible approval requirements that look beyond just your credit score. This makes getting approved directly through them easier.

Ask Credit Unions

Credit unions are non-profit lending groups in local communities. Even with bad credit, their rates can be lower than online options. And since they want to help members, approvals may be possible.

Go With Direct Lenders

Direct lenders fund loans themselves instead of using investor money. This gives them more flexibility with approvals. So even very bad credit borrowers have a shot at getting no credit check loans from direct lenders.

The key is being open to specialised lenders beyond big traditional banks.

Alternative Financial Assistance

While loans allow you to borrow money when times are tight, also know help is out there that you may not need to repay. Here are some options beyond lenders:

Government Assistance

Your local council may have support programs to help cover costs like food, utilities, or housing repairs through grants or discounted local services.

Charity Groups

National and local UK charities often provide some financial aid for expenses like medical equipment, transportation, clothing, or emergency relief.

Community Programs

Food banks, job training programs, homeless shelters and other local groups try to help those in need of temporary support make ends meet or get back on track.

So before taking on a high-interest loan that requires repayment, it’s worth checking if you qualify for charity assistance, government relief programs, discounted services or local community resources first. Every little bit that doesn’t add debt is helpful when living on limited income from benefits alone.


Getting emergency cash when you’re on benefits can help cover what you need. Unexpected expenses happen. Loans give you a way to handle them. Compare loan choices. Find one with fair rules and payments you really can make, even on a tight budget. Slowly repaying small amounts helps improve your credit over time.

Believe you deserve better ahead. Anyone can gradually strengthen their finances, no matter where they start. Focus on little steps forward. Support your community when possible. Ask others to help you understand the aid system, too. Staying hopeful and active together makes hard times less hard for everyone.

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