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No credit check loans

If someone is offering you no credit check loans, do they really not perform a credit check?

Yes and no – they are both the right answers. But what is a credit check? And, if you are looking for short term finance, is the answer really a no credit check loan? CashLady investigates.

A credit check is a way for short term finance providers to find out a little bit about your financial history.

So, how do they do that? And who holds all this information about you?

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Representative Example: Amount borrowed: £250 for 3 months.Number of repayments: 3.Interest rate p/a: 292% (fixed).Each repayment amount: £137.21.Total repayable: £411.63. APR 1272% Representative

No credit check loans UK

The main credit reference agencies in the UK are CallCredit, Equifax, and Experian.

Every time you have taken out a loan, every time you have signed up to a new gas and electricity supplier, every time you have taken ownership of a new mobile phone on contract, the credit reference agencies know.

And that is not all they know. They know whether you have been keeping up to date with your bills and paying them off in full and on time.

The credit reference agencies monitor nearly everything – if you are up to date with your mortgage account, whether you are within your overdraft limit, whether you have been making your credit card repayments on time, and so much more.

Short term loan providers always go to a credit reference agency to check out your file before they make a decision on whether they want to lend you money. And it’s not just lenders too – sometimes potential employers and landlords do a check.

There are two types of checks – a hard check and a soft check.

Hard credit check loans

A hard credit check is when a lender looks at everything on your credit file. That is the type of check a bank or building society will use if you are applying for credit.

They look at nearly every type of account that you have where you make regular payments. They check your credit file to see if you have missed any payments. They can also normally find out what your overall level of debt is (that is both your unsecured debt and secured debt like mortgages).

Hard credit checks stay on your file for 12 months and every company who looks at your file can see who did those checks and why.

As a rule of thumb, the more hard credit checks you have on your file, the more nervous potential lenders get. Rightly or wrongly, they might think you’re a riskier bet for paying back a loan than you actually are.

What is a no credit check loan?

Soft credit check loans also use credit checks but you can understand why many lenders call them "no credit check loans".

If someone does a soft credit check on your credit file, other loan companies cannot see these checks when they do a search on you. They are completely invisible and they do not affect your credit score.

These types of checks are made by companies wanting to verify someone’s identity or to offer them a new financial product without doing a hard search.

Have you had those letters come through the door saying you are pre-approved to take out a credit card? The company making that offer to you would have done a soft search on your file.

So, “no credit check loans” are, in fact, “soft credit check loans”. So, for the rest of this CashLady article, we’ll keep calling them no credit check loans.

But beware – not everything is as it appears with no credit check loans. Read on to find out more.

Read on here to find out more

Do I need a credit check?

Many online lenders may advertise that they offer no credit check loans but, as we have seen, they actually do soft credit checks. That is because, legally, all lenders have to check you can pay back the loan and that you are who you say they are.

Many no credit check loan providers will also search files to make sure that you are not bankrupt or subject to an Individual Voluntary Arrangement (IVA).

The only real type of “no credit check loan” is offered by pawnbrokers. When you take out a no credit check loan from a pawnbroker, you offer security. That security could be jewellery, electrical goods, a vehicle or gold.

Do i need a credit check?

A pawnbroker will only present a loan to you if what you offer for security is worth more than the amount of money you want to borrow.

If you do not keep up repayments on your pawnbroker loan, you lose that item forever. If it is something personally valuable to you, or something you are really sentimental about, is it really worth putting it at risk by taking out a pawnbroker loan? For most people, the answer is no.

Should I consider a no credit check loan?

When a lender or a broker offers no credit check loans, they will base their decision on whether they want to lend you money on the information they have about you from:

  • the affordability and identity form you filled in when you applied, and
  • the limited information available on the soft search they carried out.
With that information, they might very well say "yes" to you. But, it is not a firm "yes" – it is a provisional "yes". Basically, they like what they see so far. But that is not the end of it.

Are no credit check loans legal?

Getting your provisional “yes” is perfectly legal using a soft credit search.

But the company who has your application now has to make a full credit search. So, your no credit check loan has now turned into a full credit check loan.

Why is this?

In 2014, there was a big shake-up in the payday loan and short term loan market. The regulator, the Financial Conduct Authority (FCA), made every lender undergo stringent tests to make sure they were being fair, open, transparent, and honest with their customers.

And that was not all.

Are no credit check loans safe?

All finance companies, including providers of these so-called no credit check loans, have to follow the rules laid down by the FCA.

The FCA are the police when it comes to short term finance. They are the people who decide whether a company can provide these types of no credit check loans to customers or not.

If they are, you will see a notice on their website saying, “Authorised by the FCA”. So-called no credit check loan companies who are verified and registered must also follow the same rules as standard payday loan and short-term loan companies. These rules are –

  • They cannot charge more than £24 per month for every £100 borrowed
  • TAny default penalties cannot cost you more than £15
  • TYou will never pay back in interest and charges more than the amount of the loan. So, if you borrow £250, including interest and charges, you will never pay back more than £500

If someone is offering no credit check loans and they are not authorised by the FCA, please stay well away.

They are trading outside of the law and, more often than not, they will be loan sharks. No matter how much you need money, never borrow from a loan shark.

Should I accept a no credit check loan?

Should I accept a no credit check loan?

If they are registered with the FCA, there is nothing that should stop you from accepting a no credit check loan, even though every no credit check loan company will do a full credit check on you before they give you a definitive "yes" or "no."

No credit check loans direct lender

There are not that many direct lenders who say they offer “no credit check loans”. That’s because, by law, they must carry out full credit checks on anyone applying for a loan.

For those who do, these no credit check loans direct lenders will always perform a soft search on your credit file. Together with the information you supply to them, they will give you an indication about whether they think they will say “yes” or “no” to your application.

If they say “yes”, they will ask you for permission to perform a full credit search. While your soft search will not be recorded on your file, your full search will. And remember, just because they said “yes” after your soft search, it does not guarantee that they will say “yes” after your full search.

You have to ask yourself the question whether it is worth all the running around trying to find a no credit check loans broker when they do not exist and they all perform full credit searches before they give you a firm decision anyway.

Do cash lady offer no credit check loans?

CashLady is regulated by the FCA. We believe in promoting responsible lending. We do that by working with lenders we trust matching them up to the borrowers they want to hear from.

CashLady may carry out a soft credit search when you apply through us. Why do we do that?

Simple, as with other responsible companies in lending, we put the results of your soft search together with the information you give us when you fill in the application form on our site.

Then, we look at everything we have found out about you. That tells us the type of borrower you are and which of our trusted, FCA-approved lenders would be best to present you to.

By doing it this way, you do not have to make dozens of online applications to no credit check loan companies. That takes time, it is frustrating, and the no credit check loan you get could be very expensive.

If you want to have a better chance of borrowing money than approaching no credit check loan providers direct, click here to fill in our short term loan application page.

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Loan Amount (£):  

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Representative 1272% APR
Representative Example
Amount borrowed: £250 for 3 months
Number of repayments: 3
Interest rate p/a: 292% (fixed)
Each repayment amount: £137.21
Total amount repayable: £411.63