Loans with no credit checks – can I get one?

Loans with no credit checks – can I get one?

Written by Marianne Curphey, Finance Writer

If you are struggling with a poor credit history and finding it hard to get approved for a loan there are ways to improve your credit rating and get a better deal.

However, it is best to avoid lenders that offer loans with no credit checks, as they may be operating illegally. Instead, you could consider other ways to borrow money, such as boosting your credit score or getting help with budgeting or benefits.

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You should be very wary of taking on a loan that is issued with no credit check. Lenders need to be authorised to offer you credit, and they are required to conduct some sort of credit check before they lend you money. This is to establish that you will be able to pay back the loan, and that you are not taking on more debt than you can manage.

Firms that lend to customers must be regulated and authorised by the money watchdog, the Financial Conduct Authority (FCA). If a firm offers you a loan without being authorised, and does not carry out a credit check, then you should find other ways to borrow money, as they are likely to be a loan shark and may be operating illegally.

What if a lender offers a short-term loan with no credit check?

Lenders must carry out a credit check if you want to borrow from them. Some lenders and brokers will allow you to do what is called a “quotation search” or “soft credit check”. This means a lender will check your credit file but the search will not show up if other lenders view it and so your credit rating will not be affected as a result.

What about instant loans with no credit check?

The law stipulates that all direct lenders carry out a credit check on all loan applications. Therefore, if a direct lender claims to offer short term loans with no credit check, they may not be telling you the truth, or they may be operating illegally.

If you are worried about your credit score stopping you from getting a loan, there are still some ways around it, but it is worth doing your research to avoid taking on high-risk debt.

A loan with less strict credit checks will likely come with a greater risk in the form of high interest, penalties and extortionate fees, so it might be better to consider improving your credit score first.

One of the most dangerous forms of credit is a payday loan. These loans start off with high interest and the fees and charges can rack up very quickly, meaning that you can get into serious debt as a result of a small instant loan.

Payday loans are best avoided. If you are desperate for short term cash because of a financial emergency, it is a good idea to talk instead to a free advice service such as the Citizens Advice Bureau or National Debtline, who can help you get your finances in order.

Is it possible to borrow without a credit check?

It may be possible to take out a loan without a ‘full’ credit check, where a lender will only make a basic check to ensure you are not a fraudulent borrower or currently bankrupt.

But be very careful, as often any lender willing to take the risk of running only a basic check will have very high costs and strict terms that could lead you into a spiral of debt. In essence, a loan without a credit check likely to be a payday loan , and would best be avoided.

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