- No Credit Check Loans – Do they exist?
- Credit Checks Benefit You
- Credit Checks – And Why They Need to Be Performed
- Understanding Credit Search Types – The Hard Search, Soft Search and Affordability Check
- Types of Credit Searches
- Safe Alternatives to Loans Without a Credit Check
- Alternative Loans
- Direct Lenders or Brokers – Who is best for people with bad credit?
- Direct Lenders
- Loan Brokers
- The Importance of a Credit Check for Responsible Lending
- FCA Guidelines
- Customer Safety Comes First
- Improving Your Credit Score, and the Benefits of Doing So
- The Benefits
- Loan Eligibility – We Welcome Those with Bad, Poor or Even No Credit Rating
- Debt problems? There is free, impartial advice at your disposal.
- Omacl on the FCA Register
No Credit Check Loans – Do they exist?
Taking out a loan via an FCA approved, responsible lender, you will receive a credit check. This is a requirement of all authorised credit license holders. There is no getting around it and anyone claiming otherwise, or operating such a service is either unauthorised or operating against the rules of the FCA. And they most certainly don’t have your best interests at heart. Some consider the conduction of a formal credit check to be a bad thing, perhaps due to the worry and anticipation of not being approved for credit or wanting to avoid a loan application being stored on their credit report.
Or perhaps they simply want to avoid unknown lenders or brokers having access to the personal information contained in their credit file. Whatever the reasoning, if you want to borrow money, whatever the amount, for however long and want to do so in a safe, secure, and responsible manner, you should receive a credit check.
Credit Checks Benefit You
Below we’ll explain why, the reasoning behind it and how it benefits you. As well as whoever is borrowing you the money. Credit checks are a good thing, for all parties, even those looking for alternatives such as bad credit loans. Regardless of your current financial situation and historic credit score. There are lots of lenders in the UK ready and willing to facilitate your loan request. And whilst they might not be able to offer the option of a no credit check loan, it doesn’t mean to say that you won’t be approved.
Credit Checks – And Why They Need to Be Performed
Credit checks inform a lender of two things. Firstly, that you are who you say you are and secondly that you’re able to afford the loan you’re about to take on. Whatever way the check gets conducted, calculated, or evaluated, that is ultimately the end goal. A lender wants to know that you’re a good risk and your credit history is an easy way to be able to determine if that’s the case. But it’s not the sole reason for performing the check.
They also want to lend responsibly; they don’t want to borrow you more money than you can afford to repay (even if you might think that you can) so they use the data contained in your report to identify and gauge if you’re a risk.
Some common areas a lender will pay particular to attention are: –
- Entry on the electoral roll (to confirm the address you reside at).
- Outstanding debt and balances (to see how much you owe and how much free credit you currently have available).
- Missed payment history (to gauge how likely you are to make repayments).
- History of CCJ’s, debt relief orders, IVA’s or bankruptcy (to determine your overall risk in terms of lack of repayment).
- Amount of credit searches (to see how often you apply for loans etc).
The lender will then use the above, along with your reported income and expenditure figures to decide if they wish to offer you a loan. If a lender decides that based on the information submitted that you’re eligible for a loan but not for the amount and term you originally requested, a smaller loan may be offered. But you are under no obligation to accept this offer.
Understanding Credit Search Types – The Hard Search, Soft Search and Affordability Check
When it comes to credit searches, checks, or pulls, it is important to remember that there are several types a broker or lender may carry out. Whilst most lenders generalise the action as a “credit check”, the type of credit check executed can provide different information, offer a different outcome due to your creditworthiness or even lower your credit score simply because of it being performed. Below we’ll run through the various types of credit searches, what they comprise of and how each determines your eligibility when it comes to borrowing money.
Types of Credit Searches
Soft Search – A soft search or soft pull is more of a snapshot rather than an in depth look at your financial situation. This type of search will reveal personal information such as your name, address, and date of birth along with a list of any outstanding credit you have currently via existing loans, credit cards and overdrafts etc.
It will typically display an overview of the information you find when you run your own credit report via a credit reference agency like Experian or Equifax. Having a lender conduct a check of this nature will not leave a lasting “black mark” on your report.
Hard Search – A hard search contains all the information of a soft search but goes significantly more in depth. It also details all the loans and credit cards you’ve been turned down for in the past. It will also detail anyone you’re linked to financially. For example, should you share a bank account with your partner and any history of CCJ’s, IVA’s or bankruptcy. It is a full picture of your current and historic financial past and spans the previous 6 years.
Affordability Checks – Depending on the credit type, an affordability check can be as simple as an income minus expenditure calculation. Or it can be slightly more in depth and include a soft credit search. All loan applications will require an affordability check but they do not leave a lasting mark on your report.
Safe Alternatives to Loans Without a Credit Check
If you’re searching for loans with no credit check there is a chance that you either have a bad credit score currently. Or are trying to avoid any further black marks to your credit report because of excessive credit searches. This is entirely understandable and fortunately, there are several loan products on the market that cater for those with bad credit, poor credit or even no credit at all.
And whilst a hard pull is performed should you choose to accept one of the loan offers presented to you, the chances of approval versus traditional loans are significantly higher. We’ll run through a handful of these alternatives below: –
Bad Credit Loans – This loan type is specifically aimed at those with a bad credit history. Or perhaps those suffering from poor credit currently. Lenders operating in this sector tend to consider other aspects of the applicant’s financial situation. Notably income versus expenditure as opposed to using their credit score as the sole and often limiting factor to determine eligibility. Getting approval for loans for bad credit is typically easier than traditional lending mechanisms, but a credit check is still performed.
Payday Loans – A preferred option for those seeking out lesser or small loan amounts over a much shorter period (term) that would be typically associated with a traditional personal loan. Given the amounts are relatively small, getting approval and acceptance for such a loan often becomes significantly easier. Especially for those with bad credit or those who do not yet have a credit rating. No guarantors are required with payday loans and most payday lenders can offer an immediate decision. This is because the service is based online and, in some cases, even transfer the funds same day.
You can also use the cash for any purpose which is ideal if you simply need money via a quick cash influx due to an emergency.
Unsecured Loans – A loan not secured by an asset such as a house or car or person by way of a guarantor. Given there is no security, everything is based on the applicant’s income, expenditure, and credit score along with their ability to make the loan repayments month to month. Without leaving them short in other areas. A popular option for those wishing to borrow more than the typical £100 – £1000 loans offered via a payday loan and over a longer term than the 6 to 12 months considered for bad credit lending.
Direct Lenders or Brokers – Who is best for people with bad credit?
For those seeking short term finance, particularly those with bad credit, it’s the age-old question of whether it’s best to use a loan broker. Someone to seek out a loan on your behalf or to go to a direct lender. Someone who you will deal with directly, who will specifically give you the quick cash you require. And that same party you’ll make your loan repayments to.
Some even specifically look for lenders with no brokers. They do this as they believe this will lead to the best deal. But in truth, there are numerous advantages for each option and that which is best will differ from person to person. Below we’ll discuss how each operates and the advantages of each.
First and foremost, all direct lenders will conduct a credit check. There are no FCA authorised direct lenders operating in the UK who offer no credit check loans. Even if you provide a guarantor, as a responsible lender, a credit search is still performed on the individual applying. There is no getting around this. But there are some notable advantages in dealing with a lender directly, some of which are: –
- Benefits, offers, promotions which a broker may not have access to.
- Dealing solely with one party.
- Ability to apply via a reputable, known brand.
- Flexibility in terms of loan agreements and terms.
- Trading history, due diligence via reviews etc.
But using a loan broker also has a wealth of advantages too: –
- Higher chance of loan approval/acceptance.
- Knowledge of lenders specialising in loans for bad or poor credit.
- Ability to access several direct lenders at once.
- Eligibility determination prior to hard credit checks.
- An understanding of the industry and ability to find the right lender for the applicant.
It really depends on your current situation. Would you rather use a service such as the one we offer here at Omacl? Where we’ll seamlessly submit your application to multiple lenders with a high acceptance rate? Regardless of your credit rating. Or do you think you’ll likely benefit from a better deal via a direct lender? There is no good or bad option, just personal preference. There are also no fees or charges when using our brokerage service on the part of the customer.
The Importance of a Credit Check for Responsible Lending
Many applicants, particularly those who are looking for loans without a formal credit check tend to only view a credit search as a negative aspect of the loan application process. And something that limits or hinders their chance of approval. However, from a lender’s perspective, they only want to lend you money that they know you’re able to pay back. Without leaving you short in other areas. Or worse, leaving you in a position where you’re unable to service your debt at all. This is responsible lending and something that all the UK direct lenders we’re partnered with here at Omacl champion.
Any UK based responsible lender must strictly adhere to the guidelines the Financial Conduct Authority set out on the matter. And a formal credit check is the only way a lender is able to truly determine both your eligibility and overall ability to fulfil the terms of the loan. But it’s important to not look at this as a negative, this is primarily for your protection. You may think that you’re able to fulfil your financial obligations and make ends meet but a lender may see things differently.
It’s important in this situation to have a third party view your financials objectively with real, hard data. And use that to form an opinion as to whether the repayments are feasible for you. So, don’t look at a lender choosing to conduct a credit check at a bad thing. It’s a legal requirement, a necessity and is ultimately for your protection as well as theirs.
Customer Safety Comes First
Whilst it is certainly possible that there are some unscrupulous lenders out there offering no credit check loans. Or even lenders who do in fact conduct a credit check whilst claiming otherwise. For your own safety, we do not not recommend this. Credit checks protect both the lender and the applicant. Any lender claiming to offer loans without basing their lending considerations on your credit score or report do not care about your financial well-being. Pursuing this avenue, no matter how much you’re in need of fast cash today, is a bad idea.
Additionally, if the lender is not adhering to the rules pertaining to responsible lending that the FCA set out, there is a high chance they will not be following any of the other rules either. Should that be the case there is no way to guarantee the safety of your personal data. Or even that the loan product you’re intending to sign up for is entirely as advertised. All responsible lenders should adhere to the FCA’s various policy frameworks surrounding the fair treatment of customers. As well as lending responsibly.
Improving Your Credit Score, and the Benefits of Doing So
In order to improve your credit score, you need to have credit. This might seem somewhat backwards, but you achieve a good credit score by taking on credit. By properly servicing the debt month to month and ultimately repaying the balance in full. If you can do this, it shows to future lenders that you’re responsible and the likelihood of full repayment is high. Below are some key pointers which will help you improve your credit score.
- Presence on the electoral roll.
- Not moving house or changing addresses too frequently.
- Making existing payments on time.
- Not using all available credit.
- Avoiding unauthorised overdrafts or exceeding credit limits.
- Taking on credit via loans or credit cards if you’ve never done so previously.
- Regular review of your credit report and correcting inconsistencies.
- Closure of old/inactive accounts.
Once you have good credit, or at least an improved credit score, you will likely to enjoy the following benefits: –
- Access to more financial products and services.
- Be able to borrow larger amounts over longer terms.
- Lower interest rates, fees, or charges.
- Higher chance of approval and quicker approval times.
These are just a handful. There are many benefits to having a good rating. So even if you don’t require credit urgently, taking the steps to improve your credit score can help you in the future.
Loan Eligibility – We Welcome Those with Bad, Poor or Even No Credit Rating
Even though we’ve established that nobody is eligible for loans with no credit check, that doesn’t mean that short term finance is out of reach via online loans. In fact, most of our customers come to us with a less than perfect credit score. Or no credit rating at all. Yet we’re still able to match them to a lender who is willing to facilitate their lending request most of the time. This is because we partner with lenders who specialise in bad or poor credit. Lenders who use different factors to determine eligibility in addition to the traditional credit report.
To apply for a loan via Omacl, you need to meet the following criteria: –
- Be 18 years old or over.
- Have income from either employment, self-employment or benefits classed as income for borrowing purposes.
- Maintain a UK (bank) current account.
- Be a resident in the UK with a UK address and phone number.
To apply for a loan today, simply head over to our application page. You can complete our application process in less than 5 minutes.
Debt problems? There is free, impartial advice at your disposal.
If you’re currently in debt and are experiencing difficulties in making your repayments, it’s important that you seek advice. We’re all too aware of how debts can spiral. And we understand the difficulties those who suffer from debt face.
Below are some free to use resources, government backed to help those struggling with debt. They provide everything from free guides, advice and detailed walk-throughs. They can also assist you in the setup of various plans and processes to help get a handle on your situation.
StepChange – A UK based debt charity which offers detailed information by way of digital guides on all aspects of debt and general money management. They’re an entirely free to use service and can also arrange the setup of tailored solutions such as debt management plans, debt relief orders, individual voluntary arrangements and even bankruptcy.
They can also assist in the exploration of alternative options such as equity release if you’re a property owner. As well advice on requesting breathing space from current lenders.
MoneyHelper – This is the go-to site for all money related information from issues with debt, advice on month to month budgeting and cashflow right through to guidance on current affairs such as COVID-19 or the energy crisis. If there is one site which has it all, it is MoneyHelper.
Omacl on the FCA Register
Omacl is a registered trading name of Chojin Ltd and is authorised and regulated by the Financial Conduct Authority (FCA). You can view our registration status via reference number 732880.