No Credit Check Loans – Are They Real?

If you have a history of bad credit, you may worry about your chances of finding a lender willing to consider your application. As such, credit-conscious borrowers might wonder whether they could get a ‘no credit check loan’.

The Financial Conduct Authority (FCA) requires all lenders to conduct a creditworthiness assessment on anyone who applies for a loan. Little Loans, and all the lenders on our panel, is authorised and regulated by the FCA. We do not work with any lenders who offer loans without a creditworthiness assessment.

In this guide, we look at the reasons why no credit check loans don’t exist, as well as some options you may wish to consider if you’re worried about undergoing a credit check.

What are no credit check loans?

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. The FCA requires all lenders to perform a creditworthiness assessment on potential borrowers before issuing a loan. With this in mind, there is no such thing as a no credit check loan.

What is a creditworthiness assessment?

A creditworthiness assessment is a process completed by lenders to establish whether you can reasonably afford to repay a loan based on your current financial circumstances.
This will consist of either a hard credit check or Open Banking.

During a creditworthiness assessment, a lender will take into account your regular monthly income, as well as essential expenditure on things such as rent or mortgage and utilities. These figures allow lenders to work out if your current financial situation leaves you with enough spare income to afford the monthly loan repayments.

Providing credit without this information is not only irresponsible but could lead to a spiral of debt for the borrower. Applicants should be cautious of any lender that claims to offer a guaranteed loan without conducting any form of creditworthiness assessment, as this is against FCA regulations.

You can check a company against the FCA register here.

What is a credit check?

A credit check, also known as a credit search, is a process which enables a lender to look at the information on your credit report and understand your past financial behaviour. As part of a credit check, a lender may look at how much credit you already have, how you’re managing it, and whether you’ve paid back previous borrowing on time.

There are two types of credit check: a soft credit check and a hard credit check.

Soft Credit Checks

A soft credit check, also referred to as a soft search, provides an overview of your credit report. Lenders and brokers often conduct soft searches to determine whether your application could be successful without fully examining your credit history. The result of the soft credit check could help you decide whether or not to make a full application.

A soft search is only visible on your credit file to you and the company who carried out the check. Your credit score won’t be affected and there will be no impact on any future credit applications that you make.

It’s important to remember that you cannot get a loan with only a soft search; in order to be approved for a loan, you’ll need to undergo a full creditworthiness assessment, which will include Open Banking or a hard credit check.

Hard Credit Checks

A hard credit check, or a hard search, is a comprehensive, full review of your credit report.

Every hard credit check is recorded on your credit file and will be visible for up to 12 months. The more hard credit checks recorded on your file, the more your credit score will decline, which could make it difficult to access credit in the future.

What’s Open Banking?

Open Banking is a secure procedure carried out by authorised third parties and is used by many lenders as part of their creditworthiness assessment.

With your consent, Open Banking allows your chosen lender to view your online bank account and recent financial activity. Please note that Open Banking offers a read-only view; third parties cannot alter your account or take any money.

Reasons you might worry about undergoing a credit check

There are a number of reasons why people might be tempted to search for a ‘no credit check loan’. Many people lack confidence in their credit score or worry that they won’t pass a credit check. This could include zero contract workers who may be concerned that an unstable income could stand in their way of being approved; freelancers; and those who are new to a country and haven’t had time to build up their credit history.

However, even with bad credit or a thin credit file, finding a lender willing to consider your application for a loan isn’t necessarily an impossibility.
Please note that Little Loans does not work with any lenders of payday loans, but we could help you search for a short-term, personal loan up to £10,000. Any credit score considered.

What’s the easiest loan to get with bad credit?

There is no easy-to-get loan, regardless of your credit score.

Anybody who applies for a loan with a responsible and reputable lender will need to undergo a creditworthiness assessment. Each application will be assessed on an individual basis, and even those with excellent credit history are not guaranteed to be accepted.

Rather than looking for an easy-to-get loan, you should instead search for a loan that offers the best solution for your circumstances. You should also make sure that any lender you approach appears on the FCA register.

Why use a credit broker to search for a loan?

Using a credit broker could not only protect your credit file from multiple hard searches but it could save you time, too.

Little Loans is a credit broker, working with a panel of FCA authorised and regulated lenders. The lenders on our panel offer a range of loans to suit a variety of borrowers and financial situations, with many specialising in loans for people with bad credit.

Little Loans will scan over 30 lenders at the same time for a suitable loan, with no impact to your credit score. If we’re able to match you with a lender, you can decide whether you’d like to make a full application, which will include a creditworthiness assessment.

Please note that being matched with a lender does not guarantee acceptance.

I need money advice; who can I speak to?

If you’re concerned about anything money- or debt-related, the organisations listed below can provide you with free and impartial advice:

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Representative example: Amount of credit: £1000 for 12 months at £123.40 per month. Total amount repayable of £1,480.77 Interest: £480.77. Interest rate: 79.5% pa (fixed). 79.5% APR Representative. We’re a fully regulated and authorised credit broker and not a lender