One question CashLady is asked more than nearly any other is – “what are no credit check loans?”
Do they exist? What sort of interest rates do they offer? How long do I have to pay a lender back offering no credit check loans?
In this article, CashLady explains the no credit check loans marketplace. If you require UK specific information, read our guide “No credit check loans UK”
What is a credit check?
What is a credit check? And why does the idea of getting credit-checked by a lender make so many people want to apply for no credit check loans?
Every lender runs a series of different checks on a borrower wanting a loan, no matter how they advertise themselves. One of those checks will be a credit check. When they want to run a credit check on you, they’ll go to a credit reference agency.
Credit reference agencies collect and store lots of financial information about you. Think about the types of accounts you have where you pay regular money over to a company, for example:
- a mortgage provider
- a store card
- high street electrical store (like Dixons, Bright House, and so on)
- a credit card provider
- your gas and electricity company
Every month, these companies tell the credit reference agencies whether you’ve made the payment that is due to them or not.
What do lenders look for on credit checks?
It depends on the lender.
Banks, building societies, and high street lenders like to check everything.
That is because banks, building societies, and high street lenders generally want to lend out large sums of money – sometimes £10,000, sometimes £20,000, sometimes more.
Because the amount of money they lend out to customers is large, they want to know more about you. So, they will check the amount of debt you have (mortgage and non-mortgage) right now and how many times you’ve missed making payments in the last few years.
Importantly, when they check everything on your file (called a “full check”), it leaves a footprint on your file. If a loan officer from a bank, building society, or high street lender sees lots of footprints on your file, it makes them more nervous about lending you money.
In this article, CashLady investigates no credit check loans direct lenders: who they are and what you can expect from them.
Do no credit check loan companies check your credit?
All payday loan companies also do a full credit check even though they lend smaller sums of money.
This is because, under the law, they have to make sure that you can afford to pay back the loan. A full credit check helps them understand where you are right now with your finances.
Every loan company has to do some level of checking on you. In 2014, the Financial Conduct Authority (FCA) made every payday loan company and short term loan company undertake stringent tests on how they conduct business with customers.
If they did not pass these tests, they would not get FCA authorisation and could not lend money legally.
All this works in your favour. Because lenders understand more about you, the amount of interest you will be charged will better reflect your personal circumstances. You are less likely to overpay for your loan.
So why would lenders not want to perform credit checks? Does that not mean that they are putting their money at risk lending to people they know nothing about?
No credit check loans – short term
All no credit check loans providers do a form of a credit check called a “soft check”. They will also check that you are not bankrupt and that you are not signed up to an Individual Voluntary Arrangement (IVA).
Unlike full checks, soft checks do not leave a footprint on your credit record. No one other than you and that company will know that they did a soft check on you. That’s why some lenders call these “no credit check loans”.
The soft check only gives them little bits of information whereas a full check lets them see the full picture. It gives them enough information about whether they want to go forward with your application or not.
Should I accept no credit check loans offers?
We have already discovered that companies offering no credit check loans do a soft search on you. So, there is a credit check, despite what they say.
They do not have enough information yet, however, to give you a firm “yes” or “no”. There is only one way they can do that – and that is to run a full credit check on you.
This is something they have to do to have the best chance of passing the responsible lending tests set down by the Financial Conduct Authority (FCA).
Your no credit check loan has become, in minutes, a full credit check loan.
Do CashLady offer no credit check loans?
Cashlady is an FCA authorised credit broker, not a lender. We work with a panel of different short term loan companies that we trust. They treat customers fairly, they do not charge upfront fees to applicants, and they all passed the tough tests carried out by the FCA in 2014.
In order to give you the most suitable loan at the best rate, we sometimes run soft credit checks before we go to our panel of lenders. Having all that information means that we know the best lender or lenders to present your application to.
Every lender on our panel has their own unique criteria about the type of customers they work with best. We know what these criteria are so we know which lenders will look most favourably on your application.
Short term loan providers approve applications from a much wider range of customers than banks, building societies, and high street lenders. Your chance of getting a loan with a short term credit provider is much higher than through mainstream lenders.
And remember that because we work with so many providers and know their criteria so well, we can say with a lot of confidence that our acceptance rate is higher than going to short term loan providers direct.
No credit check loans UK CashLady
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