Can I get credit when on maternity leave?

More than asking yourself whether you can get credit while on maternity leave, you need to ask yourself whether you should.

Let’s see if it’s possible to apply for credit in this situation.

Why are you borrowing?

If you’re on maternity leave, you should think very carefully before you apply for credit. Of course, everyone’s circumstances are different, but if you’re off work and receiving statutory maternity pay, this is likely to be less than you received when you were still in the workplace.

In the UK, employers must play their employees on statutory maternity leave the equivalent of 90% of their average weekly earnings for the first six weeks of leave. For the next 33 weeks, they must pay the employee the lowest of either £139.59 or 90% of their average weekly earnings per week, and for the final few months of maternity leave, the employer does not have to pay anything.

So, depending on your particular contract of employment, it’s likely that your income will dip while you’re on maternity leave. If you’re thinking of borrowing, you need to think carefully about whether you’ll afford the repayments on your reduced income.

Can you afford it?

The thing with credit is it often comes down to your income. This plays a big role in the application process, and lenders use it to work out how much you can afford to repay each month.

If you’ve applied to borrow more than you can afford to repay, it’s unlikely your application will be accepted.

The thing is, a lender can’t ask whether you are on maternity leave and you don’t have to tell them – but that’s not to say you shouldn’t. What you will have to tell them is your current income, and if you’re on maternity leave, you’ll need to inform them of your current income (on statutory maternity pay), rather than your previous wage.

As this is probably less than you earned previously, lenders will want to be sure that you can afford the repayments. If they think you can’t, you’re likely to be turned down – even if you’ll soon be returning to work.

For example, if you’re applying for a mortgage, the lender will ask for your current income. If you’ll be returning to full-time employment soon and know your income will go up as a result, it’s worth pausing your application until you do.

This means that when you do apply for a mortgage, you’ll be earning more and so, most likely, will be eligible to borrow more.

Can you wait?

With this in mind, it might be worth waiting until you know your income will go up before you apply for credit. A larger income should open you up to higher credit limits and more competitive interest rates.