Can I Get a No Credit Check Loan?

It’s not possible to get loans with no credit check from a regulated UK lender. If you’re searching for no credit check loans because of bad credit, there are other borrowing options you could explore.

Tim Leonard Published on 21 September 2022.
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Can I Get a No Credit Check Loan?

A no credit check loan is what you might want to look for if you have been rejected for a loan or have bad credit. You’re probably thinking that if your credit score is holding you back, then why not get a loan with no credit check, where the lender won’t want to review your credit score.

But while it might seem like a perfectly reasonable search to make, the reality is that getting loans with no credit check from a regulated lender in the UK is not something you can do. Read on to find out why.

Do no credit check loans exist?

Getting a loan with no credit check won’t be an option if you’re looking to borrow through a lender regulated by the Financial Conduct Authority (FCA). That’s because the UK’s financial watchdog requires all lenders that it oversees to perform a credit check on potential borrowers before they’re allowed to offer you a loan. This is to try and make sure that you can afford the loan and can be relied upon to pay it back.

Against the backdrop of the rising cost of living and an expected increase in the number of people wanting to take out loans, the FCA recently reminded lenders that they shouldn’t use phrases such as ‘no credit check loans’, ‘no credit checks’, ‘loan guaranteed’, and ‘pre-approved’ when advertising their loans.

If a lender is willing to offer you a no credit check loan, it’s highly unlikely they are regulated by the FCA, and you won’t be protected by the regulator if anything goes wrong. Borrowing from any lender that is not FCA regulated is not something we would endorse.

Can I get a payday loan without a credit check?

Assuming you’re getting a payday loan through a regulated lender, a credit check should always be carried out by the lender as part of its affordability checks. However, given the high interest rates and potential risks often associated with payday loans, they are not a lending option you should enter into lightly.

Alternatives to no credit check loans in the UK

If you’re looking for a no credit check loan because you have a credit problem, the following might be easier to arrange if you have a less favourable or bad credit score.

Bad credit loans

Designed specifically for those with a poor or limited credit history, bad credit loans will usually have a higher interest rate than other types of loan, but in the right circumstances could help meet your borrowing needs.

» COMPARE: Loans for bad credit

Secured loans

If you have an asset, such as your home or a vehicle, that you’re willing to use as collateral against a secured loan, your chances of getting a loan could be improved, as the lender knows it has some security to fall back on if you don’t make your repayments.

» COMPARE: Secured loans for bad credit

Guarantor loans

With a guarantor loan, you’ll need to ask a family member or close friend if they are willing to be your guarantor for a loan, meaning the lender could ask them to step in and make your loan repayments if you don’t.

» COMPARE: Guarantor loans

Credit cards

While you’ll usually need a good credit score to secure the credit cards with the lowest interest rates, you can also get credit cards for bad credit designed specifically for those with credit problems.

» COMPARE: Credit cards for bad credit

Bank overdraft

If you have a bank account with an overdraft, you’re allowed to borrow money from your bank through your account if the balance on it is at zero. You’ll need to check with your bank if this facility is available to you and the interest rate you’ll have to pay.

» COMPARE: Bank accounts with overdrafts

Friends and family

Before taking out any type of formal loan from a lender, it might be worth asking those close to you if they would be willing and able to help you financially in any way. One thing to be aware of is the potential for disputes, although if you follow certain rules around lending money to friends and family, it is unlikely this will become a problem.

Why do banks and other lenders perform credit checks?

Conducting a credit check gives a lender insight into how you manage your finances and the amount of credit you currently have access to in the form of existing mortgages, loans, credit cards and similar.

A credit check can also highlight any times you’ve missed or made late loan repayments and whether you’ve experienced any more serious financial problems, such as county court judgments, debt relief orders, individual voluntary arrangements or bankruptcies.

All of this information will give a lender a good indication as to your reliability as a borrower, and help inform its decision as to whether you should be allowed further credit.

What are hard and soft credit checks?

There are two types of credit check a lender might perform:

Hard credit checks

A hard credit check is essentially a full examination of your credit history which will always be conducted before you’re finally approved for credit. It also has the potential to affect your credit rating and will be recorded on your credit report to show other lenders or companies that you’ve made an application for credit.

Soft credit checks

A soft credit check could be described as a brief assessment of your credit history which only looks at certain aspects of your credit report. Lenders therefore often use a soft check to get an idea of whether any credit application you formally make might be successful. Importantly, a soft search can’t be seen by other lenders or companies that might want to assess your credit situation and will not influence your current credit standing.

What is a pre-approved loan?

A pre-approved loan is where you get a preliminary indication from a lender as to whether you’ll be eligible for a loan and the rate, amount and repayment term you might be offered. The decision will be based on the specific information you’re asked to provide and, importantly, a soft credit check, which won’t affect your credit score or appear on your credit history.

Getting pre-approval doesn’t guarantee that you will get the loan – this will ultimately depend on the other checks a lender needs to make and the outcome of a hard credit check, which does have the potential to affect your credit score and will be visible on your credit report. However, if you’ve answered the pre-approval questions honestly, it can give you a pointer as to the likelihood your application will succeed or not.

» MORE: Learn about pre-approved loans

What credit score do I need for a loan?

There is no specific credit score that will guarantee anyone getting a loan. However, it’s usually the case that having a more favourable credit score can improve your chances of getting a loan.

» MORE: The role your credit score plays in getting a loan

Will I be approved for a loan if I have bad credit?

It is possible to get a loan if you have bad credit. It’s likely you’ll end up paying a higher interest rate than if your credit was good, but in the right circumstances it can still be worth considering.

» COMPARE: Loans for bad credit

Which are the easiest loans to get with poor credit?

Some loans might be easier to get if you have bad credit than others. These may include:

Guarantor loans

You can only get a guarantor loan if you have a friend or relative willing to be your guarantor and cover your loan repayments if you can’t. Having a guarantor can improve your chances of getting a loan because lenders know they have someone else they can call on to pay your loan if you don’t.

» COMPARE: Guarantor loans

Secured loans

With a secured loan, you put forward something valuable that you own – perhaps your home or car – as security against the loan. This safety net for lenders can make it easier to get a loan if you have bad credit, but for borrowers, there is the risk you could lose your asset if you don’t pay back your loan when you should.

» COMPARE: Secured loans for bad credit

How to improve my credit score

If you can improve your credit score you’ll give yourself a better chance of getting the credit you want, whether that be a loan, credit card or mortgage. Some of the steps you can take to try to boost your credit score include:

Make payments on time

Making repayments when you should shows lenders that you can be relied on to meet your obligations as a borrower and manage your finances sensibly.

Don't open unnecessary lines of credit

Applying for too many loans, particularly in a short period of time, can give lenders the impression that you’re over-reliant on debt and borrowing. If this leads to your applications for credit being rejected, it could damage your credit score.

Clear any outstanding debts

Paying off what you owe might help you build your credit history if you have little or none. It can also lower your credit utilisation, a key indicator that lenders use to judge how responsible you are as a borrower. For example, if the limit on your credit card is £1,000 and you use it to borrow £400, your credit utilisation on the card is 40% – ideally, aim to keep it below 30% overall.

Monitor your credit score regularly

Keeping track of your credit score means you’ll know if and when action to improve it is required. Regularly checking it can also highlight errors and any instances of fraud that may negatively affect your credit score.

» MORE: How to check your credit score

How to compare loans with bad credit

NerdWallet, in partnership with Monevo, can help you compare bad credit loans.

Without entering any details, you can see a selection of the loans available today, including the potential loan amounts on offer, representative annual percentage rates (APRs), and the range of terms allowed.

Alternatively, if you tell us how much you want to borrow, over what term, and for what reason, you can check your eligibility for these loans. It’s quick, easy and won’t affect your credit score.

» COMPARE: Loans for bad credit

Image source: Getty Images

About the author:

Tim draws on 20 years’ experience at Moneyfacts, Virgin Money and Future to pen articles that always put consumers’ interests first. He has particular expertise in mortgages, pensions and savings. Read more

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