Your credit rating is one of the most important aspects of your financial life.
Without a good credit score, you’re not only going to have a problem getting loans, you might not be able to get the house or job you want either.
With so much riding on a good credit score, it’s no wonder that many people would prefer to avoid sharing their score entirely. Because of this, companies have begun to list things like “no credit check loans” online. Unfortunately, these loans aren’t as great as they seem.
Ideally, anyone would be able to prove that they can manage their money sensibly, no matter what kind of issues they may have faced in the past. Unfortunately, that’s not really a possibility. Today, we’re going to discuss the realities of no credit check loans, and what they really mean.
Loans come in many different shapes and sizes, designed to suit consumers from all backgrounds. There are mortgages that allow you to purchase a home for your family, or to rent out on the real-estate market. There are car loans, or personal lending options, that give you more freedom to spend on whatever you like.
Unfortunately, there’s no loan available today that you can get without a credit check. Credit checks are a fundamental part of the lending process. Although it might seem like a pain to have to prove yourself to everyone you want to borrow money from, a no credit check loan wouldn’t be as good for you as it seems.
If a lender tried to give you money without checking your situation first, they’d be putting both their company, and you at risk. First, there’s a chance that the lender will never reclaim the money that you borrow. That’s something that most loan companies aren’t willing to deal with. Secondly, they could be putting you in more debt than you can reasonably handle.
The financial conduct authorities in the UK require all loan companies to legally check the credit score of any customer that applies for money. This is true even for short-term loans, payday loans, and other smaller lending opportunities that may seem easier to apply for. Even a bad credit loan demands a credit check.
There are a few reasons why a company might advertise a “no credit check” loan online. The first, and most obvious option, is that the business is trying to trick you into borrowing with them, by promising things that they can’t give. Some companies have skirted around the terms “no credit check” before to connect with customers and entice them to click on their website. However, when you get to actually applying for your loan, you’ll find that a credit check is required.
Another option could be that you’re dealing with a shady company or character. Since loan companies are required by law to check your credit, any business that tries to give you money without checking your history first isn’t a good choice for your lending needs. These businesses could be dangerous and may make it harder for you to reach your financial goals in the future.
The final reason that a company might advertise a no credit check loan, is because they offer something called an eligibility check before you continue with your application. An eligibility check or soft credit check examines the surface of your credit report and looks at where you stand from a broad perspective. However, this check doesn’t leave any marks on your credit score.
Usually, when a company performs a credit check, they do a “hard pull” which means that they collect all your information from the credit agencies. After that, other lenders can see that you’ve been checked out by another company, which may make future lenders less likely to consider you.
The more companies can see that you’ve been rejected for loans in the past, the more of a risk you become. That’s why it’s so important to make sure that you don’t apply for too many loans in quick succession. On the other hand, if a company does a soft check first, they can see whether you might be eligible for a loan, before leaving any marks.
Eligibility checks are brilliant for protecting your credit score. They ensure that you can test the waters when trying to get a loan, without putting yourself at risk of rejection. If a company says that you’ve failed their eligibility check, you know you shouldn’t go ahead with the full application.
If this happens to you, then you might decide that it’s better to take your request for credit to a bad credit lender. Alternatively, you might find that the company you applied for originally will offer you a different loan to the one that you initially wanted.
If you’re offered another product, it will be up to you to decide whether you want to take that route or not. Refusing the offer won’t have an impact on your credit score, and it won’t leave a mark on your report. However, if you decide to accept an offer or go ahead with a full application, then the lender will need to progress to a full hard credit pull.
If you’re not sure that your credit is particularly good, then it might be helpful to look into your options for getting loans when you have bad credit. Unfortunately, you can’t just hide your score from the lenders that you want to borrow from. However, you can consider choosing a loan that you’re more likely to be approved for.
Short-term loans and payday loans are often easier to get if you haven’t got the best credit score. That’s because these lenders will only give you a small amount of cash, and they’ll only allow you to borrow that money for a short period of time. This ensures that you won’t be in debt for too long.
Alternatively, if you need a larger or more long-term loan, your credit provider might ask you to consider using a co-signer or guarantor. These are people who also sign on your loan and agree that they’ll pay back what you owe if you miss your repayments. Although guarantors can be an excellent option for some people, keep in mind that they can lead to strained relationships.
You’ll also need to make sure that you have someone with a good credit score in your life that would be willing to take on the risks of a loan with you. This isn’t always as easy as it seems, as many people throughout the UK suffer with credit problems.
A final option could be to work with a lender that specifically offers solutions for people with bad credit. The demand for no credit check loans has grown so significantly over the years, that companies have begun creating lending products for people who are particularly concerned about their credit situation. If you’re one of these individuals, then you can apply for a bad credit loan.
Keep in mind that bad credit lending often comes with a few issues, like a higher interest rate and more restrictions on how much you can borrow. However, this might not be a problem for you if you just need some basic financial help fast.
The unfortunate truth is that while it takes years to build a good credit rating, it can take virtually no time at all to destroy your standing with banks and lenders. Once you make a mistake with your money, that sticks with you in your credit report for a long time. It’s also worth noting that you don’t necessarily need to have bad credit to be rejected for a loan, having no credit can be just as bad.
Ultimately, you can’t make your credit score disappear by searching for no credit check loans online. However, you can start working on improving your rating as quickly as possible. For instance, signing up for the electoral roll and making sure that all of your information is correct is a good start. You’ll need to double-check all of your information to ensure that you’re not falling victims to any mistakes or fraud.
Another option is to start using a credit card carefully. Using small amounts of credit from your card and paying them off immediately will boost your credit score and make it easier for lenders to trust you in the future. Don’t forget to pay all your bills on time too. A direct debit can help with this.
If you don’t have time to start working on your credit score before you apply for a loan, then it’s best to stick to lenders who can understand and appreciate your situation.
Look for bad credit lenders and people offering short-term loans. These companies will be a lot more forgiving of your credit situation.