Table of Contents
- How To Get No Credit Check Loans
- What Is A No Credit Check Loan?
- Why Is Your Credit Score So Important?
- How Does A No Credit Check Loan Work?
- How Is A No Credit Check Loan Possible?
- Why Do People Get No Credit Check Loans?
- What Can You Get With A No Credit Check Loan?
- What Are The Positives Of A No Credit Check Loan?
- What Are The Negatives Of A No Credit Check Loan?
- No Credit Check Loans vs. Secured Loans
How To Get No Credit Check Loans
Do no credit check loans sound too good to be true? They don't have to be! You can explore this very convenient lending option if you have a score that you are not proud of, or simply if you do not want companies prying into your financial history. You can even get it to help your score get better. But before we get ahead of ourselves, let's look at what a no credit check loan entails - what is it, exactly? Who can get it? How do you get one? And what do people use it for? Let's find out!
What Is A No Credit Check Loan?
As the name suggests, a payday loan with no credit check is an unsecured loan granted to you without a credit check. If you are familiar with the process of borrowing money, you know that your credit score plays a major part. If it's less than perfect, it can severely - and negatively - impact your ability to borrow money or the circumstances surrounding your loan. A no credit check loan renders that issue void, as your score does not factor into the decision-making process. Your application is assessed without your credit history, so that you will not be judged by past mistakes reflected by that ominous score.
Why Is Your Credit Score So Important?
In the financial world, your credit score is everything and is checked by all major institutions and people you share transactions with: banks, lending companies, car dealerships, landlords, maybe even housemates. An individual's credit score is a reflection of who they are, financially, and what their behavior is like. Is the person responsible? Do they pay their bills on time? Are they trustworthy? Are they likely to default on a loan? Are they able to make regular payments long-term? These are all questions that the score answers.
You see, every move you make, financially, has an impact on your credit score - it can be positive or negative. Paying rent on time every month? Positive. Ignoring that phone bill until it goes to collections because the provider pissed you off? Negative. Defaulting on a loan? Very negative. The sum of your actions results in your rating, which will be used to judge whether or not you are likely to be a responsible borrower. You understand how this can reflect very poorly on you if you've made some bad moves in the past, and why doing away with it is a great opportunity that offers you a clean slate.
How Does A No Credit Check Loan Work?
Ok, so how do no credit check payday loans work? Who can get them, for how long, and how much? Where can you get them, and can you get a car loan? There is a lot of information to learn, so keep reading for the answers to all of these questions, and more.
Who Can Get One?
The good thing about no credit check loans is that anyone can apply and be approved. You just have to meet some minimum requirements such as being of legal age (over 18 years old), being a resident of the UK, having a bank account they can send the money to, etc. The company will most likely run an ID check.
In addition, you would need to be able to afford it, and any trustworthy financial institution will need to run an affordability check to make sure that you can repay this loan. That is good practice and reputable lenders will not allow you to get a loan that you cannot afford. So, you would have to provide evidence for your place of employment, etc.
How Much Can You Get?
When it comes to amounts, you have to be warned that they will not be very high. Understandably, since the loan is unsecured (that means that no collateral is required to secure the loan) and granted without a credit check, you will not be able to get a large loan to cover major purchases or expenses. You can expect to get a maximum of around £1000 with most lenders, so if your needs exceed that amount, then it might be best to start looking at other options.
What Is The Repayment Term Like?
It will come as no surprise that a small payday loan with no credit check will not be repaid over a long period of time. The smaller the amount is, the shorter the repayment term will be, which, factoring in the interest charge, results in a high repayment instalment. Depending on the sum you borrow, the repayment term can be as short as 1 month (which is how payday loans originated, by offering money until "payday"), around 3 months to 6 months, or up to 12 months, if you are borrowing close to the upper limit.
How Can I Get A No Credit Check Loan?
To get loans with no credit check, you apply for them, just like you would for any other kind of loan; there is no difference that you need to be aware of. Just go online and fill out an application and chances are you will be accepted. A lot of lending companies advertise an approval rate of over 97%, and quick application assessment and processing. Just make sure to offer all the necessary information in order to speed up the process and not cause any unnecessary delays.
Who Offers No Credit Check Loans?
If you're stuck on a place to get a loan like this, consider looking online or on the high street. The easiest way to find a no credit check payday loans is to do a quick online search and see what comes up. There are plenty of companies that cater to people with bad credit or who want to preserve their rating, so you shouldn't have a hard time finding someone who can offer you a loan.
Where Can I Get A Car Loan With No Credit Check?
Let's say you're looking for a specific kind of loan, like a car loan. Can you get a loan with no credit check, and where can you get it? Here, the situation gets difficult, because a car loan is a significant amount of money and most lenders will absolutely require a credit check. They are legally required to ask for one in order to be able to lend you money, because of the mandatory affordability check. So, you may encounter significant difficulty finding a lender for a car loan with no credit check, but keep in mind that you can get car finance with bad credit, instead.
Before signing a contract with any company, look into their background and practices and make sure that they are a reliable institution in order to avoid possible scams.
How Is A No Credit Check Loan Possible?
Okay, but if your credit rating is so important and so many institutions rely on it, how is it possible to get a no credit check loan?
The reason is that some checks are carried out, such as an ID check and an affordability check. These are to make sure that you are not bankrupt, that you are who you say you are, that you have a place of employment and that your wage enables you to afford to repay the loan.
These measures, along with the fact that the loan amounts are not large, but come with a high interest rate, make it possible for the lender to secure themselves against a potential loan default.
Why Do People Get No Credit Check Loans?
You may be wondering why one would look for a no credit check loan, specifically. Why wouldn't you want a lender to assess your application taking your credit score into consideration, especially since it's so important? Well, there are several reasons.
Poor credit rating
Unsurprisingly, the most common reason why people look for payday loans with no credit checks is that they have bad credit. As you may know, when your credit rating is not ideal, it can be very limiting when it comes to borrowing money. It can saddle you with high interest, short repayment terms and low loan amounts, or even prevent you from getting approved for a loan, altogether. Everyone wants to get the best deal possible, and to be given their best chance, so ignoring one's credit score can enable them to borrow at better rates.
Improving credit score
The other aspect you may not have thought about is that opting for a no credit check loan may, in fact, improve your credit score. The more you repay consistently and reliably, the better your score will be. So, for example, if you get a payday loan with no credit check that you then proceed to dutifully repay on time for several months, not only will that not damage your credit score, but it will actually help it increase, because you've demonstrated a history of reliable repayment.
The truth is that when you apply for a loan, you will essentially be investigated. Your identity, your financial history, your place of employment - everything gets dug up in order to ensure that you are a trustworthy and reliable borrower. However, quite a few people can find this type of thorough, comprehensive check very invasive and completely lacking in privacy protection. Not everyone wants their life accessible to just any lender like that, which is why they may want to opt out of a full-on credit check, unless absolutely necessary.
What Can You Get With A No Credit Check Loan?
In terms of how a no credit check loan can help, your money is your money, once you've borrowed it, so it's not anyone else's business to tell you what you can or cannot spend it on. Here are some of the things you can do with a payday loan of this type.
Use for everyday expenses
It turns out that a lot of people actually use payday loans to add to their monthly income in order to help make ends meet. More than half, actually, according to the Competition and Market Authority. In this economic climate, especially for young people, it is becoming more and more difficult to be able to afford even normal things like monthly bills. As everything becomes more expensive and incomes decrease, people are looking at ways to supplement their budgets so that they can afford everyday life.
Use it for emergencies
Sometimes, there are emergency situations we have to deal with, and they can be expensive. Things like a car repair, or fixing an appliance, or even a medical bill - they cannot be prevented or avoided, and when the time comes, you have to pay up. But what happens if you do not have any money stashed away for a rainy day? You can rely on a payday loan to help you overcome urgent financial difficulties.
Use it to improve your credit score
Your credit rating may be sad, but there are ways to improve it! One of the most clever ways is to get a payday loan with the purpose of increasing your score. All you have to do is be diligent about paying it on time and by the time you pay off the loan, your responsible financial behavior will be reflected in your score. What can be better than getting money to spend on what you want - or perhaps set it aside - and improve your score at the same time?
What Are The Positives Of A No Credit Check Loan?
Now you know everything about payday loans with no credit check - what they are, how to get them, why, etc. But if you are looking into getting one for yourself, you will want to know what the advantages are. Why this type of loan and not another one? What does this loan offer you that others don't? Let's take a look.
Your bad credit does not affect your acceptance
Obviously, the biggest thing to take into consideration is the fact that if you have bad credit, it will not factor into your application assessment. If you've been struggling with a poor credit score and you haven't been able to get loans, then this can be a very big deal. This option enables you to borrow money when you need it without having your bad credit hold you back.
The approval rating is high
Most of the lending companies that offer payday loans with bad credit also boast very high approval ratings. Sitting at over 97%, with a track record like that, you do not have to worry about not getting approved for a loan. Sure, your credit score is not factored into the assessment, but there are still checks to be carried out, and knowing that the company has a high approval rating means that you are much more likely to get the loan, so you don't have to worry about how the potential rejection will affect your already poor credit score.
It is an unsecured loan
Now, the unsecured status of a loan can be a negative aspect or a positive one, depending how you look at it. In this case, we're going to look at the positive side - first of all, if you're looking for an unsecured loan, then you probably don't intend on borrowing much, so it's not worth securing a small loan with a valuable asset. Second of all, what if you don't own an asset, in the first place? Loan options for people who do not own - or do not want to risk - assets are needed.
What Are The Negatives Of A No Credit Check Loan?
But if you're going to look at all the positive aspects of a loan option, then you also have to be willing to hear the negatives - what's wrong with this solution? What are the problems you need to be aware of? What have other borrowers struggled with? Take a look and make your decision accordingly.
The loan amounts are low
As I said earlier, if you are looking at unsecured loans with no credit check, then you probably are not searching for a large amount of money. That's good, because if you were, you'd be barking up the wrong tree, so to speak. Generally speaking, you will not get more than £1000, so do not expect a big pay-out. If you are looking for lower amounts to cover smaller expenses, this can be for you. If, however, you are looking for bigger sums for major purchases, you will need to look for something else.
Repayment terms are short
You know what goes well with a small unsecured loan? A short repayment term. That's right - don't expect to be able to pay this loan off at your convenience or discretion. The smaller the amount, the faster you will need to repay it, so make sure you have that cash handy. This can be good, because you're not tied to the loan forever, but generally, it's a negative aspect, because it forces you to produce the money from elsewhere to pay it back immediately. Plus, the instalments are higher this way.
There may be possible affordability issues
One of the major issues with payday loans, and one that gets brought up very often when it comes to this sort of lending, is the fact that a lot of people enter a vicious circle of sorts. If you cannot actually afford your loan, then you will get another one to repay the first one, and the cycle never stops. Or you just get one, pay it off, and then immediately get another one. That happens when the lender did not do a proper affordability check and didn't stop the borrower from getting a loan they cannot repay.
In order to avoid having your credit score impacted by rejections from loan applications, remember to do a soft search beforehand to make sure that you are likely to be approved for a loan.
No Credit Check Loans vs. Secured Loans
If you're looking for viable alternatives, then perhaps you would like to consider secured loans. Why? Because it's an option that takes the pressure off your credit score, by offering a different way to secure your loan. There will still be a credit check involved, but you are less likely to get rejected. Both options come with advantages and disadvantages, and the option that will be best for you depends on what your needs and preferences are. Let's compare them!
- The loan amounts are higher
- The interest rate is lower
- It helps significantly improve your credit score
- You need to own an asset
- You risk losing the asset
- You are tied to the loan for a very long time
No Credit Check Loans
- It is an unsecured loan
- There is no credit check
- You have a high approval rating
- The loan amount is lower
- The interest rate is higher
- The repayment amount is short
Now you've been briefed on everything there is to know about no credit check loans; you know what they are, how they are made possible, where to get them, and how, and all the other details surrounding them. You even know what the PROs and CONs are, so you can weigh them accordingly before making your final decision. From now on, it's up to you to decide whether or not you should get a loan with no credit check.