In this article:
- What is a No Credit Check Payday Loan?
- What is a Credit Check?
- What would a lender look for on a Credit Check?
- Do No Credit Check Loans really exist in the UK?
- If a company offers a No Credit Check Loan, should I accept it?
- Is it legal to offer No Credit Check Loans?
- What are the alternatives to a No Credit Check Loan?
What is a No Credit Check Payday Loan?
It’s a term we come across quite often and a question that we also see a lot – where can I get a quick loan with no credit checks? It’s an interesting question and one that we think really reflects how payday and short term loans are thought about by the public. Asking a question like this indicates that this type of finance isn’t taken as ‘seriously’ as others and that anyone can get a no credit check payday loan.
The answer to the question is that it’s a loan where the lender doesn’t run any credit checks with the main 3 credit reference agencies, meaning that pretty much anyone could get approved for the loan as long as you pass basic identity questions.
However, as we’ll go on to explain, the answer to the question and the reality are two very different things.
What is a Credit Check?
Whenever you apply for credit in the UK, whether that be a credit card, finance for a sofa or a car or a loan, lenders refer to 3 major credit reference agencies to get an overview of your financial history and to assess the kind of risk you would pose to the business if they were to lend you money – they want to be sure you pay them back.
Not all lenders use all 3 credit bureaus to check your record, it’s normal for lenders to choose just one or two of them – it costs the business money every time they request a customers credit file. Lenders that you already have agreements with will typically only report the details of your account to one or two of the credit agencies.
What would a lender look for on a credit check?
A lender will check over several things, not just your financial history. Another important part of the credit check is verifying the identity of the applicant, this is why it’s important to ensure you are registered on your local council’s electoral role – it tells the lender you are who you say you are and you live where you say you live.
They will of course also then look at your financial profile – this will include things like:
- How many credit accounts you have?
- Have you kept up to date on all of the repayments?
- How many times have you applied for credit recently?
- How much of the credit available to you are you using?
- Have you defaulted on any agreements or been taken to court by another lender?
As well as all of this, they’ll look for any information regarding fraud as all of this is recorded within your credit report.
You must remember that all of this happens in seconds, years ago your credit report would be manually reviewed by an underwriter (a person that makes decisions manually on credit applications) however nowadays the credit check is all performed electronically.
Do no credit check loans really exist in the UK?
No, they do not – at least not legally. A large proportion of UK adults have bad or poor credit and many people search for no credit check payday loans in the hope they’ll find a lender that will give them a loan.
When you use a search engine like Google to try and find no credit check loans you’ll come across lots of different websites advertising loans like these – in nearly all cases these will be brokers that simply want to get you to apply using their form so they can pass your details on.
The really easy way to think about no credit check loans is to remember that they simply do not exist.
There is a certain association that payday loans have with no credit checks. Many years ago, lenders advertised their products like this and because payday lenders often lent to those that couldn’t get credit anywhere else, people assumed lenders didn’t run credit checks.
If a company advertises a no credit check loan, should I consider it?
No, you shouldn’t. If you come across a loan company that is offering loans without credit checking you (or your Guarantor if you are applying for a Guarantor loan) then you are most likely dealing with:
- A credit broker
- A loan shark
Some of the more unscrupulous credit brokers often use terms such as ‘no credit check loans’ because they may only make a soft search on your file in order to assess your suitability for a loan with one of the lenders they work with. Whilst the soft search isn’t visible to lenders, if you have particularly bad credit you will still more than likely be declined. Even if you are matched with a lender after a soft search, the lender will always perform a hard credit search before agreeing a loan. Many brokers advertise no credit check loans with the sole purpose of getting your details so that they can be used for marketing.
Any company advertising themselves as a lender and offering no credit check loans are more than likely unregulated or are a scam. Fraudsters put up websites advertising services like this in order to capture people’s personal information.
Is it legal to offer no credit check loans?
No, you cannot extend an offer of credit to anybody without first fully assessing their suitability for the product and to ensure they can afford the loan – for this, you must have a credit check.
The financial markets in the UK are some of the most tightly regulated in the world, and for good reason. The regulations imposed on lenders are there to protect you from getting into serious debt and this is especially important when dealing with high cost short term credit.
You cannot rely on trust alone when you are dealing with credit, as we mentioned before lenders do want to be repaid so they will always rely on the information supplied to them by the credit reference agencies before agreeing to a loan.
What are the alternatives to a no credit check payday loan?
In terms of a loan that is given with no credit checks, there are no alternatives. However, it’s important to remember that just because someone has bad credit that doesn’t automatically exclude them from all loans.
The short term loan market is a far more forgiving group of lenders when compared to mainstream lenders and they know that a large part of their customer base may have some adverse credit.
Using a trusted credit broker that works with a large panel of lenders, like we do here on allthelenders, can help. We can search the market for you and tell you the lenders that will likely accept you without you having to make multiple applications and without it hurting your credit score.
No credit check loans do not exist in the UK but we can still help if you have bad or poor credit. Our lenders specialise in helping those with some adverse credit. We can search the market for you using just a soft search so it will have no impact on your credit score and we’ll tell you the lenders that would accept an application from you.