Universal credit yes or no.

Smiggles6294

I have recently lost my job and am currently weighing up whether or not I should go on Universal Credit to help with bills at home. I currently have £17,246 saved in a Moneybox LISA and I have a high credit score.

I am worried that if I take U.C my credit score will tank and I will struggle to buy a place of my own.

Grumpy_chap

I have recently lost my job and am currently weighing up whether or not I should go on Universal Credit to help with bills at home. I currently have £17,246 saved in a Moneybox LISA and I have a high credit score.

I am worried that if I take U.C my credit score will tank and I will struggle to buy a place of my own.

AIUI, money held in LISA still classed as capital for UC application so that level of savings would preclude access to means tested benefits.

You may be eligible for some non-means tested benefits. nJSA is likely to be available depending upon your NI contributions record.

Even if you are not eligible for any benefits it can be worth signing on as a good Work Coach can be a great support in that path through to a new role.

When you say you "lost your job" does that mean that you have any redundancy pay, pay in lieu of notice, holiday pay, etc?

Claiming benefits would be unlikely to affect your credit score as much as expending any savings you have.

Your priority needs to be returning to work in a new job - this may feel hard now but you may look back on the current challenge and see it as a blessing in a year's time.

Good luck.

elsien

Your credit score has no bearing on future decisions about lending to you.

It is your credit history and affordability that lenders will taken into account, and each will have their own criteria and scoring system.

Altior

As above, you won't qualify for UC based on the upper capital limit.

Your largely meaningless credit score is unaffected by benefits. For example I have not had any earned income for 15 months now and still have a strong 'score'. Of course, I need to be honest in any applications that test credit, eg energy switches. So my currently strong credit report is also largely irrelevant as I wouldn't qualify for any new credit!

It's the usual variables that will be significant once your income hopefully recovers. As long as you don't miss any payments, get any defaults et al, I wouldn't see it having a lasting impact. High street mortgage lenders will however want to see a demonstrable record of salary and employment (or self employment) up to the application.

Newcad

It's an interesting question and personally I am not so sure that £17,246 in a lifetime ISA would automatically exclude claiming UC.

That's because the withdrawal value, except for specific circumstances, attracts a 25% reduction.

https://www.gov.uk/lifetime-isa/withdrawing-money-from-your-lifetime-isa

So in the circumstances the withdrawal value would only be £12,934.50 if withdrawn, and so that is the actual capital value of the ISA in the circumstances.

Depending on other savings that you may have, you could actually withdraw it all at once and then claim UC if your total capital was still under £16K.

Altior

I found a definitive answer on this, from this parliament actually.

The Lifetime ISA is a savings product. As with other savings and investments
products it counts towards calculation of UC. In calculating entitlement
to UC it is the realisable value of the Lifetime ISA which is used (i.e. after
deduction of the withdrawal charge) not the amount held in the account.
Households will be ineligible for Universal Credit if they have capital
over £16,000. In such cases, it is likely that they have alternative means
of financial support, so this limit ensures that help which comes from
taxpayers, many of whom have limited capital, is directed to families who
need it most. Universal Credit is there to support people who do not have
sufficient resources available to meet their basic needs. While it is important
to protect the incentive to save for customers on low earnings, people
with substantial capital should take responsibility for their own day-to day
support.

https://committees.parliament.uk/publications/49434/documents/263311/default/

Newcad

In calculating entitlement to UC it is the realisable value of the Lifetime ISA which is used (i.e. after
deduction of the withdrawal charge) not the amount held in the account.

Thanks for that confirmation of my thinking above, saves me wading through the ADM..