Credit Building > How to apply for a Universal Credit loan?

How to apply for a Universal Credit loan?

Wollit Team3 minute read · Updated 1st July 2024

Universal Credit is a government program that helps people in the UK with financial support. One important part of Universal Credit is the advance payment. This is like a loan that helps you pay for important things until you get your first payment.

Let’s see how you can apply for a Universal Credit advance and how to pay it back.

Who is eligible for Universal Credit advances?

To get an advance on your Universal Credit payments, you need to meet these requirements:

It's your first Universal Credit period.
You've had a jobcentre interview already.
You're having money problems and need it for essentials.
Your payments have increased due to a change in your situation.

How do I apply for a Universal Credit advance?

To apply for a Universal Credit advance, you have several options:

Online application. You can apply online through your Universal Credit account. This option is only available if you are in your first payment period and have had an interview at the jobcentre.
Work coach. You can talk to your work coach at the jobcentre to apply for an advance. They will check if you are eligible and help you with the application process.
Helpline. You can call the Universal Credit helpline to apply for an advance. This option is available if you have already had your first Universal Credit interview.

How do I repay Universal Credit advances?

Repaying a Universal Credit advance is easy:

You'll pay back the advance by having a small amount taken from your Universal Credit payments each month.
How long it takes to pay back the advance depends on when you asked for it. If you asked on or after April 12, 2021, you have up to 2 years to pay it back. If you asked before then, you have up to 1 year.
If you're really struggling with money, you can ask to delay paying back the advance for up to 3 months.

What about budgeting advances?

Budgeting advances are a type of help from Universal Credit that can assist with unexpected and one-time expenses.

These advances are available only if you are already receiving Universal Credit and need financial assistance for specific purposes, such as:

Help with essential household items, rent, or moving costs.
Or assistance with work-related costs like work clothes, tools, or childcare.

To get a budgeting advance meet these criteria:

You must have been receiving Universal Credit for at least 6 months.
You must have earned less than £2,600 in the past 6 months.
You must have no outstanding budgeting advances.

To apply, you can simply do it over the phone by calling 0800 328 5644.

What happens if I can't repay my Universal Credit advance?

If you are having trouble repaying your Universal Credit advance, there are several things you can do:

You can ask to delay making repayments for up to 3 months. You can do this by talking to your work coach or the Universal Credit Service Centre.
You can also talk to your work coach about making a plan to repay the advance. This might involve changing how much you pay each month or when you pay it.
If you are no longer receiving Universal Credit, the repayments will be taken from other sources, like other benefit payments or wages. You might also receive a letter from the Department for Work and Pensions (DWP) explaining how much you owe and asking you to contact the DWP Debt Management Contact Centre to arrange repayment.

If you do not make payment arrangements, the DWP can recover the amount you owe by contacting your employer to arrange deductions from your earnings or by using an independent debt collection agency.

Do Universal Credit advances show up on my credit report?

No, Universal Credit advances do not show up on your credit report. The advances are repaid through deductions from your Universal Credit payments, and they do not appear on your credit history or affect your credit score.

In fact, if you have bad credit and are also on benefits, you should consider Universal Credit advances before going to a lender who specialises in bad credit loans.

This is because lenders who specialise in bad credit loans charge extremely high interest rates, often above 1,000%.

A much better solution is to rely on Universal Credit advances for quick cash needs, and to slowly rebuild your credit while you’re preparing to enter the job market.

One of the ways you can do this is through a specialised, affordable credit-building tool like Wollit.

Wollit is an app that reports your monthly subscription as loan repayment, helping you build a history of timely repayments without the risk of getting hit with high-interest charges or going over your card limit. It can even report your monthly rent payment to Experian, adding another line in your credit report that shows lenders you're responsible and pay your bills on time.