Heard about ‘no credit check’ loans that guarantee approval? Find out why these loans are a myth, as well as how credit checks work and what you can do to prepare for one.
Heard about ‘no credit check’ loans that guarantee approval? Find out why these loans are a myth, as well as how credit checks work and what you can do to prepare for one.
A credit check is when a company searches information on your credit report. There are two types of credit checks — hard checks and soft checks. Both are recorded on your report, but only hard checks can be seen by lenders. That’s why hard checks lower your credit score, but soft checks don’t affect it. Lenders may do a hard check when you apply for a loan with them.
‘No credit check’ loans don’t exist in the UK. You won’t even find short-term loans or payday loans without credit checks. The good news? There are ways to increase your chances of getting accepted for a loan, even if you have bad credit. Read on to learn how.
Lenders have to carry out creditworthiness checks on all loans regulated by the Financial Conduct Authority (FCA). This rule helps protect both you and the lender. A credit check helps lenders understand how you’ve handled credit in the past, as well as what credit you may already have. It gives them an idea of if you’re likely to repay them, helping them decide whether to approve you.
Your credit history is just one thing lenders consider. They also look at the details on your application form, such as your monthly income. And they may already have data on you if you’ve been their customer in the past.
Yes, it’s possible. ‘No credit check’ loans don’t exist, but bad credit loans do. They’re designed for people with low credit scores, meaning you may be more likely to get approved. Lenders usually offer lower amounts and higher interest rates on bad credit loans. And they may place more importance on things like your income and employment history when deciding whether to approve you.
Yes, it’s possible but harder. This is because there’s less information to help lenders understand the risks of lending to you — so they may decide it’s safer not to accept you. You may find it easier to get approved for a bad credit loan (these are explained above).
You may have little or no credit history if you’re new to the country, or if you’ve never used credit or paid bills in your name. Luckily, there are several ways you can build your credit history over time.
It can be helpful to find out why you were refused credit. Lenders don’t have to tell you their reasons, but it doesn’t hurt to ask. You may be able to guess why by looking at your credit report or checking your credit score. If you think your credit history is the reason, try to improve your score before applying for another loan.
Being refused credit lowers your score, making it harder to get approved. So it’s wise to leave several months between credit applications to give your score time to recover.
You don’t need a ‘no credit check’ loan to be able to apply with confidence. See the loans you’re more likely to get when you search with Experian. We calculate your chances of approval by checking your unique data against lenders’ criteria.
Searching loans is free and takes less than two minutes. And don’t worry — Experian only does a soft check when we calculate your chances of approval, meaning your score won’t be affected.
You usually need a high credit score to get a personal loan, especially a low-interest loan. But it’s possible to improve your chances of acceptance by using a guarantor. This is someone (often a parent or partner) who agrees to make your loan payments if you can’t. A guarantor typically needs a good credit score and they should understand the risks before signing up.
If your credit history has a few blemishes, consider getting a bad credit loan. These offer lower amounts and more expensive rates, but they’re usually easier to get approved for.
Need cash in an emergency? Here are a few potential options:
Arranged overdraft – this is credit attached to your bank account. The repayments are flexible and you’ll be charged interest or fees until you’ve repaid what you owe. Make sure your bank agrees before you go into your overdraft.
Cash advance – this lets you get cash from your credit card. It’s an expensive option as you’ll pay a higher interest rate and extra fees on the advance.
Salary advance – your employer may allow you to borrow some or all of your next month’s pay. Not all employers offer this and there may be restrictions, such as only being able to borrow if you’ve worked there for a minimum number of months.
Friends or family – consider borrowing from a friend or relative, as this can help you protect your credit score and avoid interest and fees.
A credit check is an essential part of getting a loan, but it needn’t be a worry. Experian takes the guesswork out of applying. We show you which loans you’re more likely to be approved for when you compare with us.
Comparing loans takes less than two minutes, doesn’t cost a penny and won’t affect your score.
We're a credit broker not a lender†