In this brief blog, we are going to talk about the no credit check credit products such as no credit check loans. Quite often people(usually with bad credit or no credit history) will search for no credit check loans or no credit check payday loans as they are aware that most lenders will not be willing to lend to borrowers with their credit ratings and credit history.
In reality, All lenders which are regulated by the Financial conduct authority, which is pretty much most lenders, are required to be responsible lenders. This means that they must check the creditworthiness of the borrowers that they are lending to.
They simply can’t offer any credit check products as this will make them irresponsible lenders and they will not be treating their customers fairly as those customers could easily end up in a situation where they cannot repay the no-credit-check products and end up in more debt.
This could be a reason for the FCA to suspend or terminate a lenders authorisation to lend in the UK.
What is a credit rating?
A credit rating is a score which is given to you to summarise your creditworthiness. Your credit rating is compiled by a credit bureau. In the UK the credit bureaus we have operating are Crediva, Experian, Transunion, and Equifax. The method by which your credit rating is compiled differs from one credit bureau to the other. The credit rating used by each credit bureau is also not the same.
Your credit rating and credit worthiness are important because lenders use this to determine how much they will lend to you and at what rate they will lend to you.
Your credit rating will affect if you can get a credit card, a loan, or a mortgage.
Your credit rating is also used by other institutions outside of lenders such as employees or landlords.
You can get a statutory credit report from one of the credit reference agencies for free. You can get this report once each year from each credit bureau or credit reference agency.
You can also check your credit score with any of the credit reference agencies but some may charge for this.
What factors go into your credit rating?
Your credit utilization
The number of addresses you have
Your credit repayment history
The types of credit products you have e.g payday loans
The age of your credit accounts
The length of time at your address
If you are registered on the electoral roll
If you have any orders or restrictions on your name e.g CIFAS
How can I get a loan with no credit check?
There are very few if any lenders that will give you a loan with no credit check. All regulated lenders are required to determine your creditworthiness and a no credit check loan may not satisfy this requirement. If you do find a no credit check loan from a lender then you must inquire if the lender will report your monthly repayments to the credit bureaus.
Reporting your monthly loan repayments to the credit bureaus will ensure that your credit score gets a boost if you make your monthly loan repayments on your no credit check loan on time.
Are there no credit check loans?
There may be no credit check loans available but it is very likely that the lenders offering these loans will not be regulated by the Financial Conduct Authority. This means you may not be due any compensation if you are mis-sold the no credit check loan and you may not have anyone to complain to if anything goes wrong with the no credit check loan.
How can I borrow money with no credit?
If you have no credit you may still be able to borrow money from a credit builder credit card or even a bad credit loan. These specific products are designed for people with no credit history or people with bad credit. They will usually have high APRs which means they may cost more than a similar-sized loan with a better APR.
You may also be able to borrow money with no credit check from your family and friends if any of your family or friends have enough capital which they can borrow you.
Peer to peer platforms are also more likely to borrow money to people with no credit as they may have other methods of determining your creditworthiness outside of your credit score and credit history.
What Is A ‘No Credit Check Payday Loan’?
A No credit check payday loan is a payday loan where no credit check occurs. In the Uk these products are actually not available due to the regulations and requirements put together by the regulator (The FCA) which requires that every lender should determine the creditworthiness of borrowers before lending to them.
No credit check payday loans are rather simple advertising ploys by payday lenders in order to get consumers to click on their links and make a loan application.
No credit check payday loans are usually searched for by borrowers with bad credit or borrowers with no credit history as they are worried the mortgage lenders who credit check them will not offer them a loan.
In some cases, the borrowers who take a payday loan don’t want the credit check of the payday loan lender to stay on their credit file (as they fear it may limit their ability to get credit in the future) and hence they search for no credit check payday loans.
In fact, no credit check payday loans don’t exist and all regulated lenders will carry out a credit check to ensure you can afford to pay back the capital borrowed plus any interest repayments. If you are unsure on whether the lender will carry out a credit check or not, then you should contact them in writing or check their terms and conditions.
If the lender insists that the loan you are about to take out will have no credit check then you should seriously consider this as this means the lender may not be regulated, may be lying to you or the loan you are about to take could potentially put you in serious financial troubles which may cause you to lose your financial assets.
Why do people look for ‘no credit check payday loans’?
People who search for no credit check loans are either people with no credit history, little or low credit scores and people who do not want the payday loan search to appear on their credit file to avoid it limiting them from getting future credit. This is actually a thing. Mortgage lenders have been known to limit or avoid borrowing to people who have taken out payday loans in the past as they find that these kind of people are financially reckless.
Can I get same day loans with no credit check?
No, you cannot get a same-day loan with no credit check. You may see a lot of advertisements for lenders stating that they will offer you a loan on the same day you apply with no credit check. This is rarely ever the case as most lenders are required to determine your creditworthiness before lending to you and this means obtaining your credit rating.
Why do I have to be credit checked to get a loan?
You have to be credit checked to get a loan as the financial conduct authority who regulate the lenders insist that lenders should credit check you to determine your creditworthiness before they lend to you.
Lenders who advertise that they will offer you a loan without a credit check are just lying to you and you should consider if you want to use such a company.
Will bad credit stop me from getting a same day loan?
Bad credit won’t necessarily stop you from getting a same day loan. The ability for you to get a same day loan fall heavily on the ability of the lenders to underwrite your loan application. If you find a bad credit lender who is able to offer you a loan and be able to process your loan application a day then you can get a bad credit loan on the same day.
In this brief guide, we discussed No credit check products and the danger of these kinds of products. If you have any questions or comments please let us know below.
If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.
You can also contact the debt charity “Step Change” if you are in debt and need help.