Will a Lender Call My Employer When I Apply For A Loan?

No, a lender will not typically call your employer when you apply for a loan. However, being employed and having a regular income is essential these days to be approved for a loan and the lender might request proof of income through a payslip or bank statement.

There are some circumstances where a lender might call you when you have applied for a loan, such as a mortgage or certain credit cards. The lender needs to ensure that you are employed and working where you say you do, especially if you are borrowing large sums, such as a mortgage.

It is generally understood that a workplace is a private space and that personal life should not crossover – and lenders respect these boundaries.

If They Do Call, The Lender Will Usually Be Discrete

If a lender or loans provider does call your employer to verify your employment or to follow up on a payment, they will often be very discreet about the nature of the call.

The lender will not openly say that you have applied for a product or that your payment is outstanding, but they may ask to speak to you about a ‘personal matter.’

However, it is noted that calling an employer to follow up on a missed payment is usually the last option for the lender and they will almost always go to you directly by phone, SMS, email and letters.

Why Would A Lender Contact My Employer?

To check your employment – Having a regular and stable income is one of the key criteria for getting a new loan, whether it is a payday loan, personal loan or mortgage. Being able to call up your employer and ask to speak to you or check that you work there is a quick way to confirm employment – and therefore your eligibility for a loan.

However, the lender may also request a copy of your payslip or recent bank statement (sometimes for the last 3 months) to see the amount you are earning and ensure that you have an income to repay your loan.

Some lenders have access to Open Banking which allows them to see your bank statements and payments you make during the application stage.

To follow up on payment – Once the loan has been approved and funded, it might get to the point where repayments are overdue and the borrower has not responded to follow ups by phone, email, SMS or letters.

At this point, as a last resort, the lender may call your employer to speak to you, knowing that they may have a better chance of getting hold of you.

To avoid this scenario, it is best to respond to the letter’s correspondence as early as possible, even if you are not in the position to pay back right now. Lenders can offer arrangements, repayment plans and forbearance for those struggling to repay.

What Information Does a Lender Need When You Apply For A Loan?

When you apply for a short term loan or personal loan, the lender requires some key information about yourself and to get an overall picture of your financial health. 

This can include the following:

• Your name

• Your contact details (e.g. email and phone number)

• Your date of birth

• Your employment status

• Your employer’s name

• Time spent with the employer

• Monthly income

• Monthly expenses

• Monthly pay date (this helps them know when is the best day to collect repayments)

This information will help the lender see if you meet the original criteria and they will typically run some manual checks after this such as a soft or hard credit check or request proof of income through a payslip or bank statement.

Do I Need To Be Employed To Take Out a Payday Loan?

Yes, you will need to be employed either part-time or full-time to be eligible for a payday loan or personal loan.

Some lenders have a minimum amount that you need to be earning per month to be eligible, such as £500 and £800 – and this information is usually requested in the initial application.

The loan provider needs confidence that you can afford to repay your loan each month without falling into financial difficulty. 

Importantly, lenders may have different criteria for those with less traditional employment including those that are:

• On benefits
• In the armed forces
• Retired and receiving pensions
• Self-employed

If you fall under these categories, you may have to ask the lender beforehand if they are willing to accept your type of employment and source of income.