In the very competitive payday loans market, there are a number of credit brokers who may be able to arrange a loan with one of a number of lenders. However, most often lenders offering payday loans with no credit checks, also offer loans directly to the public. Almost all lenders operate online, and invite loan applications via their website, while some lenders also have a network of high street branches where loan applications can be made in person.
Risks of taking no credit check payday loans direct lender
It is possible that a lender will suggest that it can offer you a loan without you needing to undergo a credit check. If you do a web search for ‘no credit check payday loan’ then you will get some hits. However, taking them up on their offer can be very risky, for a number of reasons:
- It may suggest that the lender is not authorised by the Financial Conduct Authority (FCA), and is, therefore, operating illegally.
- If the company is authorised, the very fact that they are prepared to offer a no credit check loan suggests that they are not too concerned about following the rules. The FCA rulebook says that all lenders must carry out a credit check on each applicant before agreeing to lend to them. The FCA exists primarily to protect the interests of consumers, and one of the ways it does this is to stop companies lending to people who are unlikely to be able to maintain their repayment commitments
- If no credit check is carried out, then it means that no independent party has carried out an assessment of whether you are likely to be able to pay back the loan
- It may not actually be strictly true that no credit check loans are on offer. The phrase ‘no credit check’ may actually mean that some credit checks of a limited nature are carried out, as opposed to a full credit check.
The article “Do no credit check payday loans exist?” will help you to better understand the above-mentioned points.
What will appear on a credit check, and how might a lender use the results
A credit check is a review that a lender carries out of your ‘credit history’. Your credit history is your record in maintaining repayments on personal loans, mortgages, car loans, hire purchase agreements credit cards and other forms of borrowing.
If you have missed any payments on any of these products in the past, then these will appear on your credit check, unless the loan ended more than six years ago. If you have been overdrawn, this will show on your credit check. If you have had County Court Judgements registered against you, have been declared bankrupt or have entered into a formal insolvency arrangement in the past, these will again all show up on your credit file.
Naturally, if a lender sees that you have missed repayments in the past, it may need to carefully consider whether it wishes to lend to you. Conversely, if you have always repaid your loans on time, then the lender is likely to see you as low risk.
Why you might be tempted by a no credit check payday loans direct lender, and why you should resist the temptation
You may be tempted to consider no credit check payday loans direct lender in order to receive the loan monies faster. Payday loans are short-term personal loans that are often taken out to help with short-term financial emergencies. However, payday loans are almost always quick loans, even when a full credit check is carried out, so you still shouldn’t be left waiting for the money. The speed with which they can provide the loan is one of the main ways in which payday lenders compete with each other.
You may also be attracted by the idea of a no credit check payday loan if you have a poor credit history. However, it is still likely to be possible to get a loan in these circumstances. If this applies to you it may be best to approach a credit broker who has access to loans from a number of lenders, and who has significant experience of assisting customers with poor credit histories to find loans.
If your credit history is such that you can’t find a lender that will lend to you, then this is actually for your own good. If you have a bad credit history, take out a new loan and then fail to pay it back, then your credit record will be damaged even more. Additionally, whilst payday loans are small loans, usually for a few hundred pounds, if you don’t repay them on time, the amount you have to pay back could increase. You may have noticed that payday lenders’ and credit brokers’ websites contain the warning: “Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk.”