No Credit Check Loans - What Are Your Options

Your ability to access loans from lenders depends on your credit history. Therefore, a review of your credit history will determine whether you qualify for a loan and if so, what amount. So, can you still get loans with no credit check? Well, a no credit check loan is issued without a thorough examination of your borrowing and repayment history. For that reason, it may be issued without the scrutiny of your financial history.

The law requires lenders under the Financial Conduct Authority (FCA) to conduct a thorough credit check during a loan application process. People with a good credit history will qualify for better and bigger loans compared to those with bad credit. However, those with poor credit scores still have options beyond credit check loans. 

The Credit Check Details and Information

Credit reference bureaus provide information on borrowers with details of their borrowing history. Usually, it is information on debt and bill repayment history used to determine your ability to borrow. A credit check can be either soft or hard. A hard credit check is a review of every detail in your credit report to decide on the lending opportunity. However, a soft credit check focuses on certain information in your report.

The reason why lenders conduct a credit check is to help them know the risk levels of issuing money to you. In a credit history check, lenders look for:

●        All your past loans, mortgages and credit cards in the last six years

●        Any missed credit payments within that period

●        Overdraft data from your current bank account

●        Past county court judgments and bankruptcy records

Loan options without a Formal Credit Check

Most lenders will conduct a hard credit check before issuing loans to borrowers. This is a conventional process applied in giving money as credit and is required by law in the UK. Regulatory measures put in place include conducting credit checks before lending money. To regulate this further, there are restrictions on:

●        Chargeable interest rates to borrowers

●        Re-financing frequency of loans by lenders

●        Amount chargeable following loan defaults by borrowers

By looking at these guidelines, it is almost difficult to get loans with no credit check. This is so because companies face fines in the event they do not comply with these guidelines. It can also lead to the withdrawal of the lender’s operating license. For that reason, it is advisable to avoid no credit check loans at all costs.

The law prohibits the issuance of loans without a credit check. Therefore, you should be wary of such offers because you will not have protection by the law should the lender decide to impose heavy fines on defaulted loans.

Even with payday loans, some background credit check is required before the issuance of the loan. This also applies to any other unsecured loans out there. In that case, do not enter into agreements with any lender promising to give you no credit check loans.

Avoid No Credit Check Loans

Lenders and borrowers seek protection in any financial engagement. Therefore, regulation is key to enjoying this protection as provided through the law of the land. For that reason, it is not safe to take loans from unregulated lenders in the market. These are, in most cases, the lenders offering no credit check loans to borrowers.

Safe loan applications must go through hard credit checks. Most importantly, you should borrow them from a regulated lender in the market. That way, you can get legal help and support should anything go wrong in the agreement.

Instead of risking with no credit check loans, you can still access loans for people with bad credit ratings. However, this comes at a hefty cost than to those with good credit reports. Therefore, this is the only option you have if you fear getting loans through the conventional process of conducting hard credit checks.

Final Thoughts!

Regulation in borrowing is vital for effective financial services. Therefore, credit checks are vital for any loan application process. That way, lenders can access the risk against borrowers and determine their eligibility for loan approval. For that reason, no credit check loans are not safe to get because there is no law supporting their existence. It is better to get high-cost loans than to engage in unsafe borrowing! 

Disclaimer : The above is a sponsored article and the views expressed are those of the sponsor/author and do not represent the stand and views of The Tribune editorial in any manner.