How do tax credits and other benefits affect credit rating?

glothy

I work full time, earn a good wage and have good credit, but my circumstances now mean I have a choice between reducing my hours slightly and not claiming any benefits or tax credits, OR reducing my hours a bit more and claiming tax credits/benefits to make up the short fall.

What would be the effect on my credit rating if I chose the latter option? Assuming the overall monthly income would be the same in both circumstances, do lenders care whether benefits make up a proportion of that income?

[Deleted User]

It will vary across lenders (hence why you don't have a 'credit rating').

As a general rule, most would probably be happier to see earned income but it depends on the wider picture.

National_Debtline

Hi glothy


In terms of very general "creditworthiness" (I use this wider term so that people don't confuse it with what they see on their credit reports or credit "scores"), I agree with zx81 that lenders on the whole will give greater weight to earned income.


Many benefits exist specifically in order to supplement a person's/household's low income, and/or will be time-limited and subject to periodic reviews in a way that a salary is not, meaning that they can be seen as more "volatile" by lenders.


Dennis
@natdebtline