What Credit Score Do I Need for a Payday Loan in the UK?
Published 18th of October 2012·Updated 7 April 2026
Reviewed by: Reviewed for accuracy April 2026
Payday lenders in the UK do not require a high credit score. Most will lend to applicants with poor or even very poor credit, provided they have a regular income and a UK bank account. However, payday loans carry very high interest rates, and missing a repayment causes serious damage to your credit file. Before applying, consider whether a cheaper alternative is available.
Short Summary
Payday lenders are regulated by the Financial Conduct Authority (FCA) and are required to carry out affordability checks, but their credit score requirements are much lower than those of mainstream lenders.
There is no published minimum credit score for a payday loan. Lenders such as Peachy and Lending Stream focus primarily on whether you can afford the repayment, not on your credit history.
The interest rates on payday loans are very high. The FCA caps the total cost at 100 per cent of the original loan, meaning you can never be charged more than double what you borrowed.
Missing a payday loan repayment triggers late fees and a default on your credit file, which stays there for six years and makes it harder to access any form of credit in future.
If you are in financial difficulty, free debt advice from StepChange (0800 138 1111) or Citizens Advice is a safer starting point than a payday loan.
How do payday lenders assess applications?
The FCA requires all payday lenders to carry out an affordability assessment before approving a loan. This means checking that you can afford to repay the loan in full by your next payday without falling short on essential bills. Lenders look at your income, your regular outgoings, and sometimes your bank statements.
Credit score is a secondary concern for most payday lenders. Many will approve applicants with defaults, CCJs, or poor credit histories, as long as the affordability check passes. This is intentional: payday loans were originally designed for people who cannot access mainstream credit.
What are the actual costs of a payday loan?
The FCA caps the interest and fees on payday loans at 0.8 per cent per day of the outstanding balance, with a total cost cap of 100 per cent of the original loan amount. The table below shows what this means in practice.
| Loan amount | Loan term | Maximum daily interest (0.8%) | Total repayable (at cap) |
|---|---|---|---|
| £100 | 30 days | £0.80 | £200 |
| £200 | 30 days | £1.60 | £400 |
| £300 | 30 days | £2.40 | £600 |
| £500 | 30 days | £4.00 | £1,000 |
These are maximum figures. The actual cost varies by lender, but payday loans are consistently more expensive than other forms of credit.
What happens if you miss a payday loan repayment?
Missing a repayment has two immediate consequences. First, the lender may apply a default fee (capped at £15 by the FCA). Second, and more damaging, a missed payment or default is recorded on your credit file with Experian, Equifax, and TransUnion. This negative mark stays on your file for six years and will make it significantly harder to get mainstream credit, including mortgages, car finance, and even mobile phone contracts.
If you know you cannot make a repayment, contact your lender before the due date. FCA-regulated lenders are required to treat customers in financial difficulty fairly and must refer you to free debt advice services.
Are there safer alternatives to payday loans?
In most cases, yes. The table below compares payday loans with some lower-cost alternatives.
| Option | Typical APR | Credit check required | Notes |
|---|---|---|---|
| Payday loan | Up to 1,500% APR | Soft or hard check | High cost; damages credit if missed |
| Credit union loan | 12.7%-42.6% APR | Yes | Much cheaper; must be a member |
| Authorised overdraft | Varies; typically 19.9%-39.9% EAR | Set up in advance | Only suitable for small, short-term shortfalls |
| 0% credit card | 0% for intro period | Hard check; requires fair credit | Not available if credit score is poor |
| Budgeting Advance (Universal Credit) | 0% | No credit check | Available to Universal Credit claimants |
Credit unions are non-profit financial co-operatives. The Association of British Credit Unions (ABCUL) can help you find one in your area. A Budgeting Advance from the Department for Work and Pensions is an interest-free loan available to Universal Credit claimants for essential costs.
What should you do if you are in debt and considering a payday loan?
If you are considering a payday loan to cover existing debts or essential bills, talk to a free debt adviser first. StepChange Debt Charity offers free, confidential advice online and by phone (0800 138 1111). Citizens Advice also provides free debt guidance. Taking on a high-cost loan to manage existing debts almost always makes the situation worse over time.
Frequently asked questions
Can I get a payday loan with a very poor credit score?
Yes. Most payday lenders accept applicants with poor or very poor credit scores, including those with CCJs or defaults. The lender's main concern is whether you can afford the repayment, not your overall credit history. However, affordability checks are still required under FCA rules.
Will a payday loan improve my credit score?
Only if you repay it on time and in full. A repaid payday loan adds a record of on-time repayment to your file, which is a positive signal. However, some mainstream lenders view the presence of payday loans on your credit file negatively, as it may suggest financial difficulty, even if they were repaid without issue.
Do payday lenders do a hard credit check?
It varies. Some payday lenders carry out only a soft search during the application, which does not affect your score. Others carry out a hard search. Check the lender's terms before applying, or use a broker that carries out a soft search first.
Is it possible to get a no-credit-check loan in the UK?
Legitimate FCA-regulated lenders are required to carry out an affordability assessment, which usually involves some form of credit check. Any lender advertising a guaranteed loan with no checks at all is likely to be operating outside FCA regulations and should be avoided. Unlicensed lenders, sometimes called loan sharks, are illegal and dangerous.
How quickly can a payday loan affect my credit score negatively?
A missed payment is typically reported to the credit reference agencies within 30 to 60 days of the due date. A default is registered if the account remains unpaid for a longer period (usually 3 to 6 months). Both a missed payment and a default will reduce your credit score immediately on the date they are reported.
What is the maximum amount I can borrow with a payday loan?
Most UK payday lenders cap loans at £1,000 to £1,500 for new customers, with higher limits for repeat borrowers who have a history of repaying on time. The FCA does not set a maximum loan amount, but the total cost cap of 100 per cent of the original loan applies regardless of the amount borrowed.