What Is a No Credit Check Loan for Bad Credit?
Contrary to what the term may imply, a no credit check loan does not mean that the lender will not conduct a credit check. Instead, it just means that they will be carrying out a soft credit check, rather than a hard check.
And the difference between the two is that while a hard check will normally have a negative impact on your credit score, a soft check will not, as it leaves no footprint on your credit record.
This is a minimum requirement that is expected of all credit lenders by the Financial Conduct Authority, which means that if you were to come across any lenders online that say they do require credit checks, chances are that they are most likely untrustworthy or fraudulent.
And it is for this reason that if you intend on borrowing bad credit loans with no credit check you should rely on an online broker like PaydayLoansUK, as we can connect you to payday loans with no credit check direct lender that is not only trustworthy but can also offer you highly competitive rates, as well as the highest likelihood of being approved, even if you happen to have a bad credit score.
Types of No Credit Check Loans for Poor Credit
Payday loans with no credit check are popular but risky, bad credit borrowing option that is meant for dealing with unexpected emergencies, because they come with extremely short repayment periods that are usually due in full as soon as your next paycheck arrives.
They also come with extremely high APRs of up to 400%, depending on the lender, which is why they can often be very difficult to pay back on time. And if you are unable to repay these loans on time, the lender may raise the fees and interest to extend the loan, thereby creating a cycle of debt that can often be difficult to overcome.
Personal loans allow you to potentially borrow £10,000 or more, depending on your level of creditworthiness. And in contrast to payday loans with no credit check, these loans without credit checks can be repaid over a series of monthly payments, which means that you don’t have to repay the whole amount at once.
And since these loans come with much lower and affordable monthly payments, this makes them much easier to manage without having to stretch your budget. The only downside is that these favorable terms often come with more stringent eligibility requirements.
What Is the Difference Between a Soft and Hard Credit Check?
A soft credit check happens when a no credit check loans UK lender conducts a soft search to decide how successful your application can be without actually conducting a full examination of your credit history. This means that it will not leave a visible footprint on your credit file, as you will be the only one able to see them on your report.
And because of this, these credit checks will usually have no impact on your current credit rating or any future loan applications that you may end up making, no matter how many checks are performed.
In contrast, a hard credit check involves the no credit check lender contacting Credit Reference Agencies who will usually open your credit file to gather further details of your financial history. And each time a hard credit check is performed, it ends up being logged in your report, thereby remaining visible to other credit lenders for a period of about 12 months.
As such, it is important that you avoid repeatedly applying for finance within a short space of time, because doing so will impact your credit score negatively, and it can also indicate to lenders that you are struggling to manage your finances, which makes you seem like a high-risk borrower.
How to Apply for a No Credit Check Loan for Bad Credit?
1. Initiate Your Application Online
Even if you have a bad credit score, all you need to get started is to fill out an online form for no credit check loans, which will require you to fill in your personal information, financial details, as well as contact information. It should only take a few minutes to complete.
2. Review Your Lending Options
Our system will then generate a list of pre-approved lenders and you can compare your available lending options to find the loan with no credit check that is best suited to your financial needs and situation. Keep in mind, that you should only choose the bad credit loan that you are confident you can repay, or you risk facing penalties and fees for defaulting.
3. Wait for Formal Approval
Once you have found the offer that you are most satisfied with, you can formally accept it, at which point, the lender will conduct a soft credit check to review your creditworthiness before granting final approval. The lender may also end up contacting you for additional information.
4. Await Your Funds
Once final approval is made, you just need to wait for your borrowed money to be deposited into your account. And depending on the date and time of application, you can even expect the funds to be deposited in as little as 10 minutes after final approval.
The Rules on No Credit Check Loans in the UK
It is important to remember that the term no credit check loans does not mean that no credit check will be performed. This is because all legitimate credit lenders in the UK are regulated by the Financial Conduct Authority (FCA) and according to them, all lenders are obligated to conduct some sort of credit check on your report to assess your capability of affording your loan repayments before approving any bad credit loan.
However, the good news is that final approval is not usually based on just your score, which is why most lenders will normally opt to conduct a soft credit check on your application, just as a formality. Furthermore, the benefit of only applying for bad credit loans with no credit check from FCA authorised lenders is that you are also protected by the FCA’s price caps. This means that;
- Interest and fees must not exceed 0.8% of the original loan amount.
- Even if you miss more than one repayment, default fees must not exceed £15.
- Lenders cannot increase your interest rate after a missed or late repayment.
- You are not obligated to pay more than the loan’s original amount in all interest, fees, and charges.
Frequently Asked Questions
1. Why do people search for no credit check loans?
It is not uncommon to find yourself struggling to secure a personal loan from a bank, especially if you have a bad credit score. However, the benefit of no credit check loans is that lender approval is mostly based on your ability to show proof of income, rather than your credit rating.
And since most of these loans come with short repayment periods, they can be easily applied for and tend to be processed fast, which makes them the best option for those looking to deal with emergency expenses or unexpected bills, such as replacing a broken heater or dealing with an unexpected car repair.
2. Can I get a payday loan with no credit check?
No credit check loans can often sound like an attractive proposition, but it is important to remember that in the UK all regulated lenders are obligated to conduct some form of credit and affordability checks before offering a loan.
However, this doesn’t mean that having a bad credit score will negatively impact your chances of securing a loan. On the contrary, most of the lenders that we can partner with specialise in providing bad credit loans, which means that they prefer to place more focus on your ability to repay the loan on time, rather than your credit rating.
3. Are payday loans with no credit check legal?
No. All credit lenders in the UK are regulated by the Financial Conduct Authority (FCA), and according to their rules, all legitimate lenders must make sure that they conduct some form of credit and affordability check before approving any loan application.
This means that if you come across any lender or loan service that states they will not perform any credit check, then chances are that they are not regulated by the FCA. In which case, you should take care to avoid entering into any form of credit arrangement with them, otherwise, you risk compromising your financial security.
4. How do no credit check loans work?
It is impossible to completely avoid a credit check when applying for a loan in the UK, because they tend to be used for identity verification purposes, at the very least. However, most bad credit lenders are less interested in your credit score and are more focused on assessing your finances to verify proof of income.
As such, they will usually conduct a soft credit check on your report as a formality. If you pass the payday loans eligibility checker, and your loan application is approved, then you can expect the lender to deposit the funds in your checking account within the agreed-upon period.
5. Are no credit check loans right for people with bad credit?
If you have a bad credit rating, then no credit check loans are a good alternative option to consider. However, if you decide to go with this option, then you need to take into consideration how much money you can reasonably afford to borrow.
And this is because failure to meet your repayment obligations for no credit loans can often result in further deterioration of your credit score. Furthermore, be careful which payday loans no credit check direct lender you partner with, as some of them will usually charge high late payment fees and penalties, which could make your debt situation even worse.
6. Are no credit check payday loans safe?
In the current regulatory environment, UK borrowers are legally protected from predatory lending practices by the FCA. In other words, all UK lenders are bound to follow the same rules and practices laid out by the FCA, which means that they must ensure all loans are affordable and will not place borrowers in further financial distress.
So, as long as you take care to only partner yourself with reputable FCA authorised lenders and brokers, you can rest assured the bad credit loans you borrow will be safe, as you won’t have to deal with any hidden terms or interest rates that are impossible to meet.