Explaining Payday Loan Eligibility Criteria

Confused female scratching her head

If you’d like to know more about eligibility criteria for payday loans, but don’t know where to start, you’ve come to the right place. Ever wondered what the absolute basic criteria are that all payday loan lenders will ask for? Or whether you can apply for a payday loan with a poor credit rating, or without a bank account? We’ll dive into the ins and outs of payday loan eligibility checks, as well as payday loan criteria.

What are the minimum payday loan lending criteria?

Most payday lenders will consider applications from a wide range of prospective borrowers, including those who might not have the most perfect credit background. This is great, from a consumer perspective, but there are a few minimum payday loan requirements that almost all responsible lenders will want you to meet before they’ll even look at your application:

  1. You are over 18 years old

  2. You have a UK bank account

  3. You are a UK citizen

Responsible lenders registered and authorised by the Financial Conduct Authority (FCA) should go a little further in applying minimum lending criteria. If you meet the three basic payday loan criteria, you can usually apply for a payday loan. However, to have a realistic chance of being approved for a payday loan, you will have to meet certain other eligibility criteria for payday loans.

What else is required for a payday loan eligibility check?

Responsible direct lenders may also look for the following minimum lending criteria for payday loans:

  • Your credit history

  • Your history of bankruptcy or CCJs

  • Your income

  • Your employment status

Your credit history

Payday lenders registered by the FCA will have to carry out a creditworthiness assessment before entering into a credit agreement with you, This can take several forms, depending on what the lender deems necessary and relevant. But it should be sufficient to make sure the lender is confident that you will be able to make the repayments as agreed.

The same goes for lenders assessing an application for an increase in the loan amount or a further loan on top, of or following, an existing loan.

If you have had problems repaying loans in the past, you may still be accepted for a payday loan and you are free to apply, providing you meet the other minimum requirements. However, your credit rating may have an impact on the amount of loan you will be offered, and the interest rates you will pay, so you will usually get a better deal if you have a better credit record.

CCJs and bankruptcy

Certain credit problems will be viewed more negatively than others. These include County Court Judgments (CCJs), which have yet to be settled, and bankruptcy. If you have either of these on your record, you may struggle to secure a payday loan with a responsible lender, and considering a lender not registered with the FCA is not recommended and could lead to more serious financial problems.

Your income

Having a regular income is one of the main things a payday lender will look for when deciding whether they should approve your application. After all, if you don’t have a regular income, you won’t be able to predictably repay a loan.

Some direct lenders will insist that you have a minimum income, such as £1,000 per month, for example. This helps them avoid lending to people who have very low incomes and who are unlikely to be able to repay a loan without leaving themselves financially vulnerable by doing so.


Most FCA-registered short-term or payday lenders will check that you are employed before agreeing to lend you money. Although an employment contract can end, leaving a borrower in a difficult financial position, being employed at the point at which your credit agreement is signed, is usually a minimum lending criterion.

Some responsible lenders might accept self-employed applicants, especially if they can demonstrate a solid regular income. However, most lenders still view self-employment as a less predictable source of income.

What are the alternatives for people who don’t meet the payday loan lending criteria?

If you are looking for a personal loan of some kind, but are either unemployed, lack a large enough regular income, or have a poor credit history, there are alternatives to consider.

Guarantor loans

These are personal loans that are taken out by a borrower, but guaranteed by a loved one who agrees to cover the debt if the borrower is not able to. Lenders check both the borrower’s and the guarantor’s credit history and financial details before agreeing to a guarantor loan and both parties stand to incur damage to their credit file if the debt is not repaid on time.


You may find that your bank account provider may consider opening an overdraft facility on your account if you need a small amount of cash to tide you over. Overdrafts do charge interest, but you can minimise these costs by paying them off in full each month.

Borrowing from friends or family

This may seem like an option that you would rather avoid. But many people are surprised at how willing loved ones are to help you out over a short period. Everyone struggles from time to time and there’s no shame in asking for help.

Agreeing to a payment plan

If you were looking to borrow money to repay another debt, perhaps the best solution is to approach the company you owe money to and ask them for a new payment plan. Being honest is always the right policy when it comes to debt. Most responsible lenders will help you repay in a way that you can afford, over a longer period, or with a payment break, for example.

Signing up to a credit union

Credit unions are an old-fashioned concept that still has a place in helping people access credit when they need it, regardless of their situation. The idea is that you become part of a community that pays into the credit union, which then lends out to members when they need it.

Finally, always remember to consider the above alternatives before applying for a payday loan. If you can get by without applying for emergency loans or other short-term loans, then you should try to avoid getting into debt. Make any changes you can to minimise your expenditure and communicate with your creditors to try to work out payment plans.

If you do decide to go ahead with applying for a payday loan, only consider those who are registered with the FCA and who lend responsibly.

Hopefully, you now feel equipped with the necessary knowledge about payday loan criteria and payday loan eligibility. For more insights, why not head over to the Moneyboat blog? There you’ll find handy articles such as what is a loan shark? and what is a logbook loan?

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