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If you would like to get approved for a short-term loan but you are worried that your credit score may prevent this, you might have wondered whether there is such thing as a “no credit check” loan – in other words, a loan for which a credit check wouldn’t be required. 

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The short answer to that question is… no, there isn’t such thing as a “no credit check” loan, or certainly not from a reputable and regulated lender in the UK. 

Strict lending rules in the UK mean that if you wish to borrow money from an authorised lender in this country, you will need to undergo a credit check – it really is as simple as that. 

But you might have also heard it is possible to obtain bad credit loans in the UK – or to put it another way, you can be granted a loan even if your credit score is less than brilliant. And the great news is, this isn’t a myth – having a poor credit score isn’t an automatic bar to you getting a loan. 

What else, however, do you need to know before you begin to approach lenders for a bad-credit loan? 

Why do lenders need to perform credit checks at all?

Why do lenders need to perform credit checks at all

As we touched on above, there is a regulatory dimension to the need for lenders in the UK to carry out a credit check on someone who applies to borrow money from them. A lot has happened since the comparatively “wild west” era of payday loans more than a decade ago, and one of those developments has been tighter regulation of loan companies. 

However, it is also important to emphasise that it is in a lender’s own interest to arrange for a credit check on a prospective borrower. After all, this process enables them to assess how reliable the given person will probably be when it comes to repaying the money. 

Drawing upon information that major credit reference agencies (CRAs) – including Experian, Equifax, and TransUnion – have on you, lenders will look at your financial history, encompassing such factors as how much you might have previously borrowed from lenders, and your track record of paying credit back. 

The lender’s aim will be to use this data to determine your “creditworthiness”, which will be a major factor in their decision as to whether to provide you with a loan. 

Applying for multiple loans over a short timeframe can affect your credit score. Consider your financial situation and seek independent advice if necessary.

So, what credit checks can I expect if I apply for a bad-credit loan?

So what credit checks can I expect if I apply for a bad-credit loan

Before we go any further, it is probably worth us mentioning that there isn’t officially such thing as a “bad-credit loan”. It is an unofficial and informal term, but it is true that various lenders in the UK specifically cater to people whose credit scores are less than brilliant. So, whenever you see references to “loans for bad credit in the UK”, this is what is meant by the term. 

As for what credit checks you can expect when you apply to a bad-credit lender, there are two main types of check to be aware of: soft searches, and hard credit checks. 

As the term indicates, the former is the “softer” form of credit check. It entails a lender checking what interest rates and products a given applicant is eligible for. It also isn’t visible to companies, which means a soft search doesn’t have any impact on the applicant’s credit score or any credit applications they may submit in the future. 

A hard credit check, on the other hand, constitutes a more rigorous and complete search of the given applicant’s credit report. With every hard credit check being recorded on the applicant’s credit report, any company will be able to look and discern that the particular individual has applied for credit. 

This, in turn, could have the effect of driving down that person’s credit score if they make several credit applications in a short timeframe, given that all those applications will show up on their credit report. 

We encourage you to carefully consider your ability to repay any loan, particularly if you have a history of credit challenges. Responsible borrowing is key to maintaining and improving your credit score.

What is the process for those who seek a loan through CashCompare?

What is the process for those who seek a loan through CashCompare

Bear in mind that if you use our own no-obligation quote request form here at CashCompare, as we are a credit broker rather than a lender, we will not carry out any credit checks ourselves. 

The companies that are featured in our panel of lenders, however, will perform a soft search to determine your loan eligibility and creditworthiness. Only if you subsequently accept a given lender’s offer of a loan, will they then carry out a hard credit check. 

So, there you have it. While there is not really any such thing as a “no credit check loan” in the UK, a credit check doesn’t necessarily have to be the terrifying thing you imagine it to be, if you are interested in getting approved for a loan. 

With there being various potential options for loans for bad credit in the UK, our team at CashCompare can help guide you towards them. It is a journey that could begin with the filling-in and submission of our straightforward no-obligation form.

This blog serves solely as an informational resource and should not be taken as financial or legal counsel. We advise you to undertake your own research and seek advice from a professional advisor to confirm that the information aligns with your unique circumstances.

"Warning: Late repayment can cause you serious money problems. Always consider if borrowing is the right option for you and ensure you can repay your loan." For help, go to moneyhelper.org.uk.

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