Credit conscious borrowers are increasingly searching for ‘no credit check loans’ and it’s easy to understand why. It’s commonly known that a credit check has the potential to impact your credit score, which can make it more difficult to get approved for loans or other financing options in the future.
However, the Financial Conduct Authority (FCA) requires all lenders to conduct credit checks. Little Loans and all of the lenders on our panel are authorised and regulated by the FCA. We do not work with any lender that offer loans without credit checks.
In this guide we look at why no credit check loans just don’t exist, how you can apply for a loan and how best to approach lenders if you’re worried about undergoing a credit check.
When people look for no credit check loans, they might be expecting a process which doesn’t involve a lender accessing their credit history at all. In actual fact, a no credit check loan involves lenders using what is known as a ‘soft’ credit check which gives them the information they need to make a lending decision. The difference here is that a soft credit check will not impact your credit score and other lenders cannot see that a search has been made.
If you chose to accept a lender’s loan offer, they will then carry out a full credit check in order to complete the application process. This is because the Financial Conduct Authority (FCA) requires all lenders to perform credit checks on potential borrowers before issuing loans. Without conducting a credit check, a lender has no way of knowing whether you can afford to repay a loan and providing credit without this information is not only irresponsible but can lead to a spiral of debt problems for borrowers. Applicants should be cautious of any lender that claims to offer them a guaranteed loan without conducting any form of credit check, as this kind of lending is not regulated by the FCA. This means that companies who do claim to offer them are unlikely to be following the rules and regulations implemented by the FCA to protect borrowers.
There are plenty of companies out there that claim to provide borrowers with access to quick, easy credit. ‘High acceptance bad credit loans’, ‘payday loans for bad credit’ and ‘no credit check instant loans’ are all examples of the kinds of lending that are readily advertised online. The truth of the matter, however, is that there is no easy option when it comes to getting a loan and those with bad credit are likely to find it more difficult than those with a better financial history.
Rather than looking for a loan that’s easy to get, borrowers should instead search for the loan that offers the best solution for their circumstances. At Little Loans we work with a panel featuring some of the UK’s leading providers of loans and will always match you with the lender that is most likely to approve your application. It’s easy to get through the application process and we will use the information you provide to identify a lender that won’t simply reject you for having a bad credit history.
A credit check (also known as a credit search) is a process which enables a company to look at information from your credit report and understand your past financial behaviour. As part of a credit check, companies may look at how much credit you already have, how you’re managing it and whether you’ve paid back past credit on time.
Checking your own credit report will never affect your score, but in some cases the checks carried out by companies may do and this could negatively impact your chances of being accepted for credit in the future. There are two types of credit check: a soft credit check (or ‘soft search’) and a hard credit check (or ‘hard search’).
A soft credit check is best described as a quick review of your credit report. Lenders often conduct soft searches to determine whether your application would be successful without fully examining your credit history.
The benefit of a soft search is that it won’t be visible to any companies conducting future checks of your credit file. Your credit score won’t be affected and there will be no impact on any future credit applications that you make. Soft credit checks are often what companies are referring to when they describe a ‘no credit check’ loan.
A hard credit check is a comprehensive, full review of your credit report. When you finalise your application for a loan, the lender you’re applying to will perform a hard credit check to ensure that you meet their eligibility criteria.
Every hard credit check is recorded on your credit file and any company conducting a hard search in future will be able to see that you’ve applied for credit. The more applications recorded against your file, the more impact there is likely to be on your credit score which may make it more difficult to access credit in the future.
An affordability check, or affordability assessment, is a process completed by lenders to establish whether you can reasonably afford to repay a loan based on your current financial circumstances. They will often be included as part of a loan application and may require you to provide proof of regular income and details relating to your living expenses.
Affordability assessments take into account your regular monthly income as well as usual expenditures on things such as rent and household goods. These figures allow lenders to work out if your current financial situation leaves you with enough spare income to afford loan repayments without leaving you without enough to get by.
As we’ve covered in this guide, there is no such thing as a loan that doesn’t require some form of credit check. There are several ways in which you can apply for a loan that will only require a soft credit check – at least in the initial stages. Two of the most common methods are:
Perhaps the most direct way to apply for a loan is to go straight to the lender of your choice. There are quite literally hundreds of different options when it comes to applying for a loan in the UK, with lending designed for different circumstances and with different rates and terms to reflect the needs of potential borrowers.
Whilst some lenders may claim to offer loans with no credit check, all UK credit providers are required to do so by the Financial Conduct Authority (FCA). All responsible lenders will therefore carry out some form of credit check on potential borrowers to ensure that they are realistically able to make loan repayments.
With so many lenders offering loans for different circumstances, it can be difficult to know if the credit that you’re applying for is right for you. By contrast to lenders, who usually only offer their own branded financial products, credit brokers work with a number lenders to match borrowers with a loan that meets their needs.
Whilst we can’t comment on the activities of other credit brokers, at Little Loans we help people who are concerned about damaging their credit score to connect with lenders. Our website plays host to our quick eligibility checker which will provide you with an initial indication of whether you will be able to access credit without the need for a credit check. You can then complete our simple application form, which again avoids impacting your credit score by conducting a soft credit check only. Until you make a full application with a lender from our panel, you can rest assured that your credit score is safe and unaffected by the checks carried out.
As hard credit checks can negatively impact on your credit score, it makes sense for borrowers to opt for less intrusive soft credit checks wherever possible. By letting us match you with the lender from our panel who is most likely to approve your application, you could decrease your chances of applying for a loan only to be rejected – damaging your credit score in the process.
As Little Loans is a well-established credit broker authorised and regulated by the Financial Conduct Authority (FCA), you can be sure that we’re trustworthy and transparent with all customers. We’re not a lender and will never charge you for our services. The work we do in helping borrowers to find loans that suit them has helped us to earn a 4.8-star rating on Feefo, where hundreds of customers have provided positive feedback.
If you have a low credit rating or are struggling financially, it is important to consider how taking out further loans may impact you. If you are concerned about coping with increasing levels of debt and financial commitments the organisations listed below can provide you with free and impartial advice
Representative Example: Amount of credit: £1200 for 18 months at £90.46 per month. Total amount repayable of £1628.28. Interest: £428.28. Interest rate: 49.9% pa (variable). 49.9% APR Representative. We’re a fully regulated and authorised credit broker and not a lender