When you think of borrowing money, the chances are that something long term springs to mind. Some of the UK’s most common forms of credit include mortgages, business loans and loans secured over property – all of which can take years to run their course. For borrowers who want a less prolonged answer to financial difficulties, a short term loan could provide a quick and easy solution to accessing money.
As a well-established credit broker authorised and regulated by the Financial Conduct Authority (FCA), Little Loans helps to connect borrowers with lenders offering loans of between £100 and £10,000 with repayment terms ranging from 3 to 60 months. Whilst we don’t deal with lenders who claim to offer no credit check loans, we do help thousands of credit conscious borrowers to find short term loans every month.
In this guide we look at why no credit checks loans are a myth, how short term loans can help you to deal with unexpected expenses and where you can apply for a loan if you’re concerned about your credit score or have bad credit.
Short term loans are offered by scores of direct lenders and are designed to provide borrowers with a quick way of accessing extra funds. Many people find short term loans to be an ideal answer to emergency costs and they can be used to pay for all manner of things from repairing a broken-down vehicle to essential home maintenance.
Many lenders offer short term loans as a modern-day alternative to payday loans. As was the case with payday loans, short term loans are designed with speed and ease of access in mind. With a quick online application process that can be completed from your PC, tablet or mobile you could receive money into your account in just minutes of being approved*.
Whilst short term loans are not appropriate solutions to longer term financial difficulties, they can be a practical way for borrowers to manage their money when faced with unexpected spending.
The simple answer is that there’s no such thing as a no credit check loan. This is because the Financial Conduct Authority (FCA) requires all lenders to perform credit checks on potential borrowers before they can offer them a loan. Without conducting a credit check, a lender has no way of knowing whether you will able to keep up with repayments and providing credit without this information is irresponsible.
The closest borrowers can get to a no credit check loan is one that uses a soft credit check as part of its application process. Many modern lenders use soft credit checks to give borrowers an indication of whether they are likely to be approved for a loan, saving them the time and effort of making a full application if they are not eligible and likely to be turned down. Soft credit checks will never affect your overall credit score and are invisible to any lenders who might conduct another check in the future.
Any lender offering a short term loan without conducting a credit check is likely to be breaking the rules set by the Financial Conduct Authority (FCA). No credit check loans are not regulated and so companies that claim to offer them may be trading unlawfully.
Potential borrowers should be cautious of applying to, or accepting an offer from, any lender which does not require some form of credit check or claims to provide ‘guaranteed’ loans. Companies trading in this way are unlikely to be offering credit subject to the usual protections put in place by the FCA, and this could leave consumers both out of pocket and without any clear recourse against the lender if things go wrong.
As we’ve mentioned, there’s no such thing as a short term loan that doesn’t require some form of credit check. That being said, if you are concerned about how applying for a short term loan might affect your credit score there are options available that will enable you to make an informed borrowing decision without impacting on your credit file.
These days, many short-term credit providers are more interested in what is affordable to you based on your current circumstances rather than any financial mistakes you’ve made in the past. Using what’s called an ‘affordability check’, lenders will assess your regular income against how much you usually spend on living expenses including things such as rent, groceries and vehicle running costs. This will help them to build a picture of what you can reasonably afford to repay and over how long. It’s why for larger amounts, the lenders on the Little Loans panel offer repayment terms of as long as 60 months.
One of the reasons that modern lenders can work in this way is because many use soft credit checks to satisfy themselves that a borrower’s profile matches their eligibility criteria. This means that a lender can quickly review your credit report without impacting on it in any way.
With so many loan options out there, it can be difficult for borrowers to know where to apply. As the Financial Conduct Authority (FCA) requires lenders to conduct credit checks on all applicants, applying for too many short term loans in quick succession can be damaging to your credit score. Fortunately for borrowers there are other options available – for instance applying for a loan via an online credit broker such as Little Loans.
By using our quick and simple eligibility checker, you can get a fast indication of whether you qualify for a loan with a lender from our panel without the need for a full search of your credit file. If you choose to complete our easy online application form, a soft credit check is conducted to determine which lender is most likely to approve you for a short term loan.
Once we’ve made the introduction you can then choose to complete a full application to the lender, safe in the knowledge that whilst all loans are subject to status, you’ve a good chance of being approved. Although the lender will then carry out a full check of your credit file, by applying via Little Loans you can minimise the chances of damaging your credit score by avoiding having to make multiple short term loan applications.
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.
If you 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.
*Once approved, your cash could be sent within minutes. The time that it takes for the cash to be received in your account will depend on the amount borrowed and your bank’s own policies and procedures.
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