Are there any loan providers that won't check my credit score?
There are several loans designed for people with low incomes or who have a bad credit score, but whatever your circumstances, loan providers must check your credit history before they lend money to you.
Despite what you may see advertised online, if you want to borrow money from a regulated lender in the UK, you'll need to have your credit report checked.
This is because lenders in the UK have to be authorised by the Financial Conduct Authority (FCA), which means they need to follow strict rules to lend responsibly, which protects you from unethical behaviour.
Lenders that advertise loans without the need for a credit check are misleading you. In reality they’ll perform a soft credit check (which other lenders can’t see) to see if you qualify for a loan.
If you’re eligible, in the small print you’ll see that a hard credit check will then be performed, which means your credit report will be left with a record of your application, which other lenders and anyone with access to your credit report will be able to see.
Why do lenders need to perform credit checks?
Lenders perform credit checks to assess whether or not you’re creditworthy. Checking your credit report will give insights into how you’ve managed money in the past and how likely you are to repay any money you borrow in the future.
Credit checks also help lenders and other organisations, such as mobile phone companies, decide whether you can afford the repayments by providing insight into existing debt including loans, credit cards, overdrafts and other credit accounts - like how you’ve managed the repayments of your utility bills in the past.
The FCA's requirement that lenders perform credit checks is also put in place to protect you as a borrower. These rules make sure that loan customers are:
- treated fairly
- only borrowing what they can afford
- given clear and accurate informations
- adequately protected
They are put in place to make sure you’re not given a loan that would overwhelm you financially, and to make sure you’re not borrowing more than you can realistically afford to repay.
The FCA also makes sure loan companies are transparent about how much a loan will cost you in total, what happens if you can’t repay and ensures lenders are clear about the consequences of not repaying a loan so you don’t get any nasty surprises or take on more debt than you can afford to repay.
What's on your credit report?
A credit report is a summary of your financial history and a record of your borrowing behaviour. You're rated on this information and given a credit score which helps lenders decide whether you're creditworthy.
The types of information held include:
- existing and past credit accounts and loans (including mortgages)
- your payment behaviour e.g. any missed or late payments
- how much debt you have
- when you've applied for credit
- existing credit limits
- bankruptcy and CCJ filings
- electoral roll details
Information in your credit report is usually provided by creditors to one or all of the three major consumer reporting agencies (CRAs) - Experian, Equifax and TransUnion.
What's the difference between a soft credit search and a hard credit search?
Soft credit checks
Soft credit checks (also known as a soft credit search) are typically used to provide a loan or insurance quote and are often the first step in applying for a financial product.
This type of check helps you and others work out whether you're eligible for things like loans or credit cards and can be useful when you're comparing products. Soft checks also help verify identity and guard against money laundering.
A soft check involves a search of your credit report, but it doesn't affect your credit score. Although the search is recorded, it is only visible to you, other lenders can't see it and your credit score isn't negatively impacted.
If you view your own credit report directly from a credit bureau, this may also be recorded as a soft credit check.
What is a hard credit check?
A hard credit check (also known as a hard credit search) is carried out when you submit a full application for a loan or other type of credit like a mortgage or credit card.
Hard credit searches look in depth at your financial history and how you've managed money in the past. This type of check also shows whether you've been bankrupt or had CCJs filed against you.
Hard checks are visible to other creditors, and an unsuccessful application for a credit product such as a loan or credit card may indicate to lenders that you’re struggling financially. Multiple hard credit checks may also negatively impact your credit score.
Creditors must get your permission before they perform a hard credit check.
How can I improve my credit score?
The first thing you should do is find out what's on your credit report. You can do this for free by signing up to an online credit reference agency like Experian, Equifax or Transunion.
For easy access to your credit record on your mobile, download an app like Clear Score or Credit Karma.
Once you've signed up, check your record carefully and ensure the report is accurate. Contact the agency to fix any errors or update personal details.
Here's some tips for boosting your credit score:
- Check you're on the electoral roll and sign up if you're not
- Stick to the terms of any credit agreements you have, this includes Buy Now Pay Later, mobile contracts and store cards
- Always pay your utility and telecom bills on time
- Don't apply for credit unless you know you'll be successful
- If you have a credit card, keep within 25% of your credit limit
- Consider using a credit builder credit card to help build your credit score if you’ve little or no credit history
- Check your financial connections/associates. If you are no longer linked to an individual showing on your report (e.g. an ex partner), close or settle any joint accounts or court judgements, then request removal of irrelevant associate record from your report.
What loans can I get with poor credit?
Whilst it’s possible for you to get a loan if you have bad credit, no credit check loans for people with poor credit are simply not possible, and don’t exist. However, there are some alternatives available for people with a bad credit rating who are worried about being rejected for a loan.
Depending on your circumstances, you could consider:
This type of loan is for homeowners only. The equity in your mortgaged property is used as security against the loan and is often used for borrowing large amounts of money over a long time.
If you have a bad credit score, but own a property, you have a better chance of getting a secured loan than an unsecured personal loan because your property guarantees the debt. Interest rates on a secured loan could be lower too.
However, if you cannot repay the loan, your home could be repossessed and used to recover the money owed.
Guarantor loans are a type of unsecured loan where someone else guarantees that the loan repayments will be made if you can't repay the loan yourself.
The loan terms are the same as a personal loan, so both you and the guarantor must have affordability and credit checks performed, which could pose a problem if you have a bad credit score. Your guarantor will typically need a good credit rating for you to get approved for a guarantor loan.
Also called a home credit loan, this is a short-term, personal loan arranged in your home and repaid weekly to an agent who visits your property. Doorstep loans are typically for small amounts, between £100 and £1,000 and are aimed at those who have a bad credit score or find it difficult to get a personal loan.
This type of loan typically charges higher interest rates, meaning they're more expensive than other loans.
Credit union loans
If you’re a credit union member or belong to a community with a credit union, you could see if the union would be willing to lend you money despite your poor credit history.
This type of loan typically has lower rates and could be cheaper than an online bad credit loan, but if your credit is very bad, your application may be rejected.
They'll take into account your whole situation and assess your application fairly, but if you need money quickly, other options may be more suitable.
Credit building credit cards
If you have a poor credit score, a credit builder credit card is worth considering if you need a way to pay for low value goods or services that accept credit cards as payment.
These cards have low credit limits but are likely to have a lower interest rate than a doorstep loan for instance.
You'll need to repay the balance of your card on time and in full every month to help build your credit score. If not, you could further damage your credit rating.
No credit check loan FAQs
You may have seen 'guaranteed approval' loans advertised, but like 'no credit check loans', they don't exist, and loan companies that advertise them are misleading you.
This is because strict lending regulations mean that whilst some loans may be pre-approved after a soft credit check, you only actually receive the money you want to borrow after a hard credit check has been performed and you sign a credit agreement.
No, it's impossible to borrow money without a credit check from an authorised money lender in the UK due to the regulator's strict lending rules. However, you may see online adverts for things like ‘quick loans no credit check’, ‘short-term loans no credit check’ or ‘small loans no credit check’.
This is because some loan brokers (who assess loan eligibility and pass on details to lenders) only carry out soft searches. You will always have a hard credit check performed by the actual money lender when you submit a full loan application to them.
Bear in mind that 'no credit check loans' are, in reality, non-existent. If you come across a company that claims to offer you a loan with only a soft credit check, you should avoid them.
While lenders can't offer loans without credit checks, it may be easiest to get a loan from lenders that specialise in bad credit loans or short-term lending - like doorstep loans, or high cost, short term loans.
If you own your own home and need to borrow a large amount, you may want to consider a secured homeowner loan; but please remember, you're at risk of losing your home if you get into financial difficulty and can't repay the loan.