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No Credit Check Loans Theorised What is a No Credit Check Loan?
In the UK there is no such thing as a 'No Credit Check Loan' although some lenders claim to offer loans with no credit checks to potential customers. This is because payday loans are regulated by the FCA, and by law, no lender is allowed to offer you a loan without performing a credit check or an affordability check to see if you can afford your repayments first. Therefore, it is important to be wary of any lenders who offer loans with no credit check as they probably aren't regulated by the FCA and aren't a legitimate lender. Regardless of this fact, thousands of people each year search for loans without credit checks, so why is that? What is it about these 'so-called' credit check free loans that makes them so appealing?
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 negatively impact your ability to borrow money or the circumstances surrounding your loan. A no credit check loan would in theory render that issue void, as your score does not factor into the decision-making process. Your application would be assessed without your credit history so that you wouldn't be judged by past mistakes reflected by that ominous score.
Who Would be able to Get One?
The thing about these loans would be that anyone can apply and be approved. You would just have to meet some minimum requirements such as being of legal age (over 18 years old), be a resident of the UK, have a bank account they can send the money to, etc. The company will most likely run an ID check.
Any trustworthy financial institution will need to run an affordability check or a credit 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.
How Would I Get A No Credit Check Loan?
Unfortunately you can't get loans with no credit check, but theoretically if you were able to just apply for them, you would be able to get one just like you would for any other kind of loan. You would be able to just go online and fill out an application and chances are you will be accepted.
Why are they so appealing?
You may be wondering why one would look for a loan without a credit check, specifically. Why wouldn't you want a lender to assess your application considering your credit score, especially since it's so important? Well, there are several reasons. Read More »
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 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 were to get a payday loan with no credit check that you then proceed to repay on time for several months dutifully, not only will that not damage your credit score, but it will help it increase because you'd have 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 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 necessary. « Show Less
How Would it be Possible to get a No Credit Check Loan?
Are no credit check loans possible? They aren’t but how would they work if they were? That is the question we are going to answer today, to make you aware of exactly how things would work with this type of lending - what would be the benefits, the drawbacks, and of course, what would be the catch?
Why Would a Lender Offer Money With No Credit Check?
One of the most common questions people have regarding these loans is why - and how - a lender would just offer you money with no credit check to speak of? After all, isn't that a super important step in verifying that you can pay back the loan? How else can they assess and secure the money you are borrowing? Well, if you thought a lender would give you the money based on trust, out of the goodness of their heart, you would be wrong. There are other background checks they would have to carry out, but any lender offering you a loan would have to look into your credit, specifically. Read More »
Any lending company worth their salt will perform an affordability check, regardless of whether or not they've run a credit check or of how good your rating is. The Money Advice Service has a loan calculator available to check what payments you'd be able to afford. A good rule of thumb is not to make deals with any lender who will not perform this check, as they do not have your best interest in mind. You should, of course, also make sure you can afford a loan, but it is also their responsibility.
In addition to the affordability check, you will also undergo an ID check of sorts. This is like a background check looking at your identity if you are genuinely whom you say you are, where you live, how long you've been in the country, etc. Think of it as kind of a DBS check. This, again, does not require your credit score or anything of that sort, so it's still not taken into consideration during your assessment. This does, however, help the lender gain a better understanding of your identity and reliability.
Finally, they will do an employment check, where they will verify your place of employment, your income, if you are likely to continue to receive income for the duration of your loan repayment, etc. This ties into the affordability check, and it is a very important step in confirming that you can, indeed, be trusted to reliably repay the loan, even without checking your credit history and rating.
The Common Issues
So you've heard about the reasons why someone might wish to get a no credit check loan if they were legal in the UK, but there would also be a lot of issues and risks you would have to take into consideration aswell. In the interest of being 100% informed, let's take a look at what the risks that come with this type of lending, would entail.
The lender might be unreliable
One issue with payday loans with no credit check is that the lending company may not be as trustworthy as it appears. Be sure to look into the company's history, as well as reviews to make sure you are not falling prey to a loan shark. Also, be vigilant when looking over the documentation and check for surprise clauses, hidden fees, and undisclosed charges.
You may encounter affordability issues
The other problem is the limitation caused by the terms of the loan itself. You see, the lack of credit check means they offer you less money, on a shorter repayment term, and with a higher interest rate, which we will talk more about in the following section. That can make things difficult when it comes time to pay the regular loan instalments.
Your credit score does not matter
The most obvious benefit is the fact that you can get a loan without having your credit score factor into the assessment. It doesn't matter if it's not up to snuff, because you can have other checks done instead, to give the lender peace of mind and some security regarding your ability to repay.
You can repay in instalments
There are types of payday loans that you need to pay in full, typically within a month of borrowing the money - these are the traditional loans until payday, hence the name. Payday loans with no credit check, however, are available to be repaid in regular instalments over a longer period, offering you some flexibility and affordability.
What's The Catch?
However, since nothing is all positive and perfect loans don't exist, there is a catch - the interest rate is typically quite high. With an APR that can even reach 1500%, this can be a very expensive loan to repay, depending on how much you get and how long it takes you to pay it back. If you borrow a higher amount that you repay over a year or longer, you are in for one heck of an interest charge, that you will be feeling fully over the course of your repayment instalments every month. « Show Less
What to do if You Have Bad Credit What About if I Have Bad Credit?
Did you know that loans without credit checks are soley aimed to attract people who have problems with bad credit? While you may think that a poor credit rating stops you from borrowing money, nothing is farther from the truth - you have to employ some clever tips and tricks to make things work for you, even with bad credit.
Problems with Poor Credit?
In the financial world, everyone is afraid of those two ominous words, poor credit. They can severely affect your life in all kinds of ways, so let's look at some of the problems you may experience when you have bad credit.
You are rejected for tenancies, business ventures, payment plans, etc.
Before agreeing to anything, everyone will take a look at your credit score to see how responsible you are with finances. So, it will come into play if you are trying to secure a tenancy, for example, if you want to pay for a sofa in instalments, if you want to start a business partnership with someone, etc. People will judge you and your projected financial behaviour based on your past behaviour, and if your score is poor, you will likely face rejection from all kinds of places.
You are rejected for loans and credit cards
The situation is no different when it comes to things like credit cards and loans. You will either be outright rejected from borrowing money or getting an overdraft, for example, or you will be offered very bad or limiting terms, like a higher interest rate, a lower loan amount, or a shorter repayment period.
Don't Be Scared Of High APR
The aspect that plagues individuals with bad credit is the very high-interest rate that comes with bad credit loans. You've heard it before, no doubt - that bad credit loans are a rip-off, or they're not worth it, or they are a sure way to sinking yourself further into debt.
What I am going to propose, however, is a different approach to this issue: don't be scared of a high APR. While yes, a loan with high interest is far from being an ideal solution, here are ways in which you can make it work for you and convince yourself that a high APR isn't the end of the world. Read More »
- Borrow a smaller amount of money Many people are put off by high-interest rates because it means that you pay back a lot more money than you borrowed, so they're worried about being able to afford repayments. However, the effects of that can be offset by borrowing less money. That way, you will be able to afford the repayments easily, and you don't have to kill yourself trying to pay off a large loan.
- Pay off the loan under a year Here's what you need to remember: the longer you take to pay off a loan, the more you will pay in interest charges. In order to avoid racking up that interest, you can try your hardest to pay the loan off as early as possible, instead of dragging it out. Sometimes, that is simply not doable, but do aim for paying it off under a year. If, however, it takes you longer to repay your debt, don't feel bad about it - statistics show that 2/3 of students will never pay off their student loans entirely, according to the Student Loans Company, so you're not alone. « Show Less
How To Keep On Track With Payments
Is the thought of making repayments giving you a hard time? Have you had trouble with consistent repayments in the past? Here are some of the things you can do to keep on track with payments: Read More »
- Cut back on your expenses to save money for your loan instalments
- Mark your due dates in your calendar and set alarms
- Use an app that tracks your debt and payments
- Set up direct debits to make sure your loans get paid on time
- Use No Credit Check Loans To Rebuild Credit Scores
One of the most clever ways to improve your credit rating that no one ever tells you about is taking out no credit check loans. Yes, paradoxically, going into debt can help you improve your financial situation and your chances to get approved for a loan in the future.
How to get a loan to improve your credit score
Since you're struggling with bad credit, you will probably already know that many lending companies will deny you loans based on the credit check, or you will be offered very bad deals. You can, in fact, circumvent rejection by opting for no credit check loans. As the name says, a no credit check loan is a loan you get without going through the typical credit check. How is it possible to get a no credit check loan? The assessment is based on other checks, such as an ID check and an affordability check where they might look into your employment situation, etc. That way, your credit does not interfere at all in your application, and you are not judged based on it.
Why does getting a loan help build your credit rating?
Since your credit rating is a reflection of your financial behaviour and responsibility, it is affected positively or negatively by every move you make. We all know that defaulting on loans or making late payments drags our score down, but we tend to forget is that good, consistent financial behaviour will improve our score. So, if you were to get a loan and pay it off quickly, consistently, and responsibly, not only would you benefit from the money you borrowed, but you would also improve your score at the same time.
All in all, poor credit is not the end of the world, especially when there are plenty of reputable lenders out there who are willing to understand circumstances and offer you a loan, regardless of your bad credit. « Show Less
How to Get a Loan Top Tips On Getting A Loan (Even if it's Not a No Credit Check Loan)
If you're looking into getting a loan without having to take a credit check, then the chances are that you're worried that your credit file could potentially get in the way of you getting your loan. However, no matter how easy getting a no credit check loan sounds it's safer and easier to get yourself a loan with a credit check. If you still need some tips to help you out with getting a loan then let's look at some top tips for securing a loan.
How To Keep On Top Of Payments
If you're looking to improve your credit score, then you have to treat this with the utmost care and make sure to stay on top of your payments. That will allow you to create a more financially responsible image for yourself. Let's find out how:
Use Budgeting Tools
It's 2018, and it's time you took full advantage of all how technology can make your life easier. Budgeting tools can do all the work for you, and they're an excellent way to ensure that a) you have enough money to afford the repayment instalments and b) that you pay everything on time. Thus, a simple spreadsheet in Excel, a special website, or a phone app can be exactly what you needed. Simply input all the data and allow the tool to do the math and keep you on track with debt and payments. Read More »
Pay Your Payday Loans Early
You know what's even better than paying your loans on time? Paying them early. You're killing two birds with one stone because paying a no credit check loan early means you don't pay extra interest and you're free of debt and all the worries looming over your head. However, more importantly, it also looks good to potential lenders because you are showing them you can be trusted to repay a loan promptly. Read More »
How To Avoid Getting Scammed
One of the unfortunate drawbacks that come with these loans is that many payday lenders are out to prey on their borrowers. However, luckily, there are some surefire ways to protect yourself against scammers and make sure that the deal you're signing is legitimate. Here's what to look out for with no credit check loans.
Research The Company Beforehand
First thing's first - before anything else, you have to look into the company you are planning to use. How long have they been operating? What are the reviews like? Are they authorised to lend money? Have any of your acquaintances dealt with them before? These are all important aspects to consider and check before committing to a loan with any lending company. You wouldn't want to sign a contract and then realise you've just legally tied yourself to a loan shark. Exercise caution.
Always Read The Terms Of The Loan
The other rule of borrowing money is to always (always, always) read the terms of the loan and every single page of the stack of papers they give you. To protect yourself, you have to know those documents backwards and forwards and be able to recite your rights and obligations at a moment's notice. The best offence is a good defence, and in this case, knowledge is power. Only once you are aware of everything there is to know about this loan should you sign a contract.
As you can see, it is entirely possible to get money with bad credit, if you opt for a loan with no credit check. Just follow our top tips and tricks, and you will be able to strike an excellent deal that can help you out with the money you need, while also improving your credit score for future loans. « Show Less
Things to be Aware of What To Look Out For
No credit check loans sound like a dream come true for some borrowers - but not so fast - there are some risks you need to be made aware of. Fortunately, you can successfully avoid them and benefit from all the advantages of payday loans with no credit checks offer you!
What Would The Risks Be?
You've probably heard many rumours surrounding these loans - that they are sketchy, that they will put you even deeper in debt, that you will end up paying through the nose in interest fees, that they can damage your credit score irreparably, etc. Some of the things you hear are true, while others are just plain misinformation. Let's talk about the risks and drawbacks, once and for all. Read More »
The interest rate would be high
Let's start by addressing the elephant in the room, shall we? Yes, a loan with no credit check comes with a very high-interest rate. You can expect APR rates that sit around 700% or even 1500%, depending entirely on the lender, your financial situation, how much you borrow, and for how long. What you need to remember is that the longer it takes to pay off the money, the more it will cost you, which can create issues of affordability.
The loan amounts would be small
The other thing is that the loan amounts are not all that high, which can become an issue if you need more money. That could lead to a situation where you take out multiple loans to cover the full sum you need, and that can make repayment a very difficult game to keep track of. It can be more responsible to simply look for a loan that will accommodate your needs regarding the amount.
The lenders are untrustworthy
When it comes to the actual lenders, unfortunately, you can encounter problems. You see, not everyone is registered and trustworthy, and there are quite a few loan sharks out there masquerading as earnest payday lenders. The number of people who've fallen prey to these predatory establishments is not small, and if you're not careful, you may end up in their greedy hands, having signed a very unfortunate contract. « Show Less
How Can You Avoid The Risks?
Ok, now that we are all informed and aware of the risks involved with no credit check loans, we can go ahead and talk about how you can avoid the risks that come up. Read More »
Make sure to check the lender thoroughly First thing's first - before signing anything, you need to investigate the lending company. Look into their background, look for reviews from third-party websites online, and check with the Financial Conduct Authority (FCA) that they are properly registered and authorised to lend money. You would not believe how many scam companies there are and how easily customers can be duped into signing dubious documents that tie them into phoney contracts. Hidden charges could be the least of your problems.
Ensure affordability before you borrow money A good lending company will always carry out an affordability check before accepting you officially or allowing you to sign anything committing you to a loan. However, it is also your responsibility as a borrower to make sure that you can afford to take this money and then pay it back, including the full interest amount.
If you think you will struggle at all, then you cannot afford it.
- If you need to borrow money from somewhere else to pay off instalments, you can't afford it.
If you have no idea whether you can afford it or not, you can't afford it.
Check that you get enough money There is no use in getting a loan if the amount will not even meet your needs, so before you sign on the dotted line, you need to double check and triple check what amount you actually need (always overestimate) and then what amount you will be able to receive (always underestimate). If the amount you can get comfortably covers your needs, then you're good to go, but if there is any chance that you might need to borrow extra from another source, then it's not worth it. « Show Less
Are There Better Ways To Get Money?
Let's say payday loans with no credit checks have not convinced you - what are the alternatives to no credit check loans, or even better options to get money when you have bad credit or are simply looking to avoid a credit check? Read More »
Secured loans - if you own an asset of decent value, such as a car, a house, or another property, why don't you maximise its potential? You can release money from such an asset, and your credit score will include countless because the loan is secured with collateral.
Borrowing from friends and family - family won't ask for a credit check - at least not most. You may only need a good character reference. It may also be a good idea to make a written document stating the terms of the loan so that both parts are secure and satisfied and you avoid future disputes.
Saving up - this is hardly a quick solution like a quick loan, but it doesn't require a credit check or going into debt. Saving up and buying something in cash or perhaps applying for cash loans leaves no room for questions or doubts.
As you can see, there are things you need to look out for and consider with no credit check loans, but the risks can be avoided if you're well prepared and financially responsible. Inform yourself about the top tips on getting a loan with no credit check so you can rest easy and enjoy your money. « Show Less
What's Better Than A No Cred Check Loan? The Alternatives
So, your credit could be better, and that is stopping you from getting accepted for loans and other types of financing. Fortunately, an accessible solution is to get no credit check loans, but if they're not up to your alley, then it might be worth considering a different option. There are alternatives you can look into if you're still unsure which way you want to go. Let's take a look at no credit check loans and what they offer, as well as alternatives.
What About Alternatives?
- Bad Credit Loans It's true that your credit score still comes into play for this one, but the good news is that bad credit loans are especially designed for potential borrowers who do not have the best financial history. That means that you won't be rejected automatically and they have options for all sort of credit levels. You have to pay attention to interest, as it will be higher, and to other limiting factors, such as a smaller borrowing limit and a shorter repayment period. Read More »
Secured Loans If you're lucky enough to have assets, then the solution to your bad credit issues might be simpler than you thought. Why get an unsecured loan that relies on your poor credit rating, when you can get a loan that you know you are eligible for? All you have to do is put your asset up as collateral to secure your loan. It can be a car or a property, and that gives you access to a lower interest rate and a higher borrowing limit.
Family Loans Wouldn't it be easier to circumvent all the issues that come with borrowing from banks and traditional lenders and rely on a family loan? That way, you don't have to deal with eligibility issues, interest rates, etc. and you sure won't run into problems with your bad credit. However, always keep in mind that money doesn't always mix well with the family. « Show Less
In conclusion, while no credit check loans aren't a valid option to pursue if you need financing with bad credit, there are other choices you can make, as well. Alternatives include bad credit loans, secured loans and family loans, each with their pros and cons that need to be considered. Take the time to weigh all your options before deciding to make sure that you pick the best financing avenue for you.
Last Updated on the 17/10/2018