Does Universal Credit affect your credit score?
Written by
Emily Tye
Reviewed by
Amy LancashireUniversal Credit does not affect your credit score. It is a government benefit, not a form of borrowing, so it is not recorded by the UK's three main credit reference agencies (Experian, Equifax, and TransUnion) and will not appear on your credit file. That said, your wider financial situation can still affect your ability to get credit, and it is worth understanding where the real risks lie.
What is Universal Credit?
Universal Credit is a means-tested government benefit for people on a low income or out of work. It is administered by the Department for Work and Pensions (DWP) and replaced several older benefits, including income-based Jobseeker's Allowance, Housing Benefit, and Working Tax Credit.
Does Universal Credit appear on my credit file?
No. Your credit file tracks how you borrow and repay money (e.g. loans, credit cards, overdrafts). It does not record your income, your employment status, or whether you receive any benefits.
Because Universal Credit is a source of income rather than a form of credit, it is not reported to Experian, Equifax, or TransUnion. The same applies to other benefits you may receive.
It’s also worth knowing that applying for Universal Credit does not involve a creditworthiness check and will not affect your credit score.
Could Universal Credit affect my chances of getting credit?
Universal Credit itself will not affect your credit score, but lenders do not rely on your credit score alone. They also carry out affordability checks, looking at your income and outgoings to assess whether you can comfortably afford repayments.
If Universal Credit is your main source of income, some lenders may consider your overall income too low for certain products, or limit how much they are willing to offer. This is not a credit score issue, it is a separate affordability decision, and it varies between lenders.
Understanding what affects your credit score can help you separate the two.
What could actually affect my credit score while I'm on Universal Credit?
Your credit score is shaped by your borrowing behaviour, not your benefit status. The things that can lower your score while you are on Universal Credit are the same things that affect anyone:
Missing payments on credit cards, loans, or bills
Defaulting on a debt (which stays on your credit file for six years)
Receiving a County Court Judgement – find out what a CCJ means for your credit
Making multiple credit applications in a short period, each of which triggers a hard search on your file - learn more about hard vs soft searches
If a drop in income makes it harder to keep up with payments, contact your creditors early. Many lenders have arrangements in place to help in situations like these, and communicating before you miss a payment is always better than after.
How can I build my credit score while on Universal Credit?
Being on Universal Credit does not stop you from improving your credit position. These steps can help.
Register on the electoral roll. Being registered to vote at your current address helps lenders verify your identity and is one of the most straightforward things you can do for your score. Read more about the electoral roll and your credit score.
Pay all bills on time. Even making the minimum payment on a credit card on time counts positively on your credit file. Setting up direct debits where possible removes the risk of forgetting.
Keep your credit utilisation low. If you have a credit card, try to use only a small portion of your available limit. High balances relative to your limit can signal financial pressure to lenders. See more on credit utilisation.
Report your rent. If you rent your home and pay on time, rent reporting services allow those payments to count towards your credit history. Find out more about how rent reporting works.
Consider a credit builder card. Credit cards designed for people building or rebuilding their credit history can help you establish a positive payment track record over time. Learn more about credit cards for building credit.
Check your credit report regularly. Reviewing your credit report helps you spot errors that could be affecting your score without you realising, such as wrongly recorded late payments.
For more on improving your position, see our guide to how to increase your credit score.
FAQs
There are a range of financial products available that may suit your needs. We encourage you to research your options carefully and consider seeking independent financial advice before making any decisions. This blog is for informational purposes only and does not constitute financial advice.
