The criteria for a payday loan will vary between lenders, but generally speaking, you must meet the following criteria to be eligible to apply:
- Minimum 18 years of age
- UK resident
- Employed with a monthly income
- Valid mobile number and email address
- No recent bankruptcy, IVAs or CCJs
- Good or fair credit rating
Below, Fund Ourselves breaks down these parts of the criteria to provide more clarification.
The minimum age to apply for a payday loan
is 18 years and this is pretty standard for all UK lenders. Your age will be requested in the application process and verified when credit checks are run against your name.
Everyone over the age of 18 is eligible for a payday loan and there are some ages that lenders may be more likely to lend to.
At the age of 18, the individual is likely to have a very limited credit history and this will make it challenging for the lender to determine if they are a good lending prospect or not.
For individuals applying between the ages of 24 to 35, they may have built up a bit more financial history and be used to paying off rent, mortgages or car payments and this information could be valuable when deciding the outcome of their loan application.
For Fund Ourselves and other short term lenders
, all applicants must be UK residents as part of the criteria. The borrower does not need to have been born in the UK but should be living here permanently or for an extended period.
Some aspects of your residence can influence your chances of approval. For instance, being a homeowner can be favoured since it means that you have already demonstrated your creditworthiness by being approved for a mortgage or you own a valuable asset like a property which can be used to access further funds if need be.
By comparison, living with parents or friends or being a tenant may be less favoured - but you may have other characteristics such as a stable income and good credit rating which can maximise your chances of being accepted.
Employed with a monthly income
In the general payday loans criteria, you will need to be employed (full-time or part-time) and earning a regular monthly income. Although the minimum income requirement varies between providers, the average short term lender looks for around £500 per month.
By having a stable and regular income, it demonstrates your access to funds to make regular monthly repayments.
The lender may request proof of income via a pay-slip or bank statement in order to confirm your employment and income amount.
If you are unemployed or on benefits, you are unlikely to meet the criteria for a payday loan.
Valid mobile and email address
When applying for a payday loan product, you will need to have a valid UK mobile phone account and email address. Both of these are used to electronically sign your loan agreement and the terms of your loan - and above all, it means that lenders can contact you on both these mediums if your loan is outstanding or overdue.
No recent bankruptcy
Lenders will be cautious if you have recently declared bankrupt, have an IVA or CCJ. This also reflects that a payday loan could be high cost and not well suited for you.
Your credit status or credit score gives an important overview of how well you have paid other similar forms of credit in the past including credit cards, loans, car payments, utility bills and more. Plus, it gives lenders an idea of how much outstanding debt you have and if you have missed any recent payments.
Lenders will always favour those customers with good or fair credit scores and if you have poor credit, you may wish to consider alternatives such as loans with a guarantor or borrowing from family and friends.
Does having the right criteria guarantee my approval for a payday loan?
Unfortunately not. By meeting the criteria, it means that you are eligible to apply for a payday but your approval will be based on factors such as your monthly income, credit status and affordability.
Every lender has different underwriting processes and will make a decision on a case-by-case basis. Some payday lenders have minimum requirements when it comes to credit scores, income and how much outstanding debt you have.
Some lenders also only have a maximum number of loans that they can fund each month, so whilst you may be approved one month, you may not be the next if they have met their monthly threshold.
However, the overall criteria provides an important basis of whether you could be eligible for a payday loan. So if you are unemployed, on benefits or have recently declared bankruptcy, this means that you may not be eligible and could be better off seeking alternative products or getting financial advice from a professional or charity.