There are many reasons that you might need to take out a loan, such as if you are buying a house or a new car or if you have suddenly experienced a household emergency, such as one of your appliances breaking. However, it is not always that simple to get a loan if you have a poor credit score. Read on to find out more about if getting a loan without a credit check is possible and what your loan options might be when you have poor credit.
Your Credit Score
The short answer is that no, you cannot get a loan without a credit check. If you have a poor credit score, you will not be able to apply for a loan with every company, as many loan providers are adamant that you need to have a good credit score. This is because good credit scores show that you will be able to pay the loan in question back and act as a form of reassurance for the lender in question. If you need to improve your credit score, Moneysaving Expert can give you all the information that you need to know.
The first step that you should take to get a loan is to check your credit score. You can find out what your credit score is from a credit bureau, and you should check this yearly to ensure that it has not changed and that you can prevent your score from worsening if it is starting to decrease. Knowing what your credit score is can give you a great starting point when it comes to working out what type of loan is best for you, whether you will be able to get a loan, and whether you need to do anything before you decide to take out the loan that you need.
Bad Credit Loans
Although you might hear of companies offering no credit check loans, these, more often than not, are bad credit loans. These are loans especially for people who may have made poor financial decisions in the past or people who have no credit history because they are young or have not taken out a loan before. These loans will allow you to get the money that you need for emergency use, such as if your household appliances break or if you have run out of money before payday.
Lenders give out bad credit loans to borrowers in the full light of their financial status and their credit history, and these will allow you to get the money that you need regardless of the mistakes that you have made in the past.
Bad credit loans usually either ask you for a guarantor, have high APRs, or have a low credit limit. Rather than getting a regular loan, you may also be able to get a payday loan, which takes into consideration your employment status, or a loan that uses your valuable possessions or property as collateral. Some lenders may also check that you can pay back your loan by asking you about factors such as your income. So although you may not be able to get a loan without any checks at all, some lenders check other aspects of your financial situation to see whether you will be able to repay the loan that they offer you.
Although this type of loan might not be exactly what you wanted, by taking a bad credit check loan out first before moving onto bigger and better loans, you will be able to gradually build up your credit score and prove that you are capable of paying off debt. This will then allow you to take out a much wider choice of loans in the future.
You must be careful when you decide to take out loans with a poor credit rate, though. This is because these types of loans make up for your lack of credit with high-interest rates. This can make them extremely difficult to pay off, especially if you are struggling financially in the first place, and you may end up paying back more than you have to. This means that it is only advisable that you take these out if you know for certain that you can pay them back.
If a company does offer a no credit check loan, they are not FCA compliant lenders. This means that if you take out a loan with one of these companies, you will not be protected by regulations. Many lenders that offer so-called no credit check loans are not reliable since lenders have to carry out a credit check before they are able to accept loan applications, and so you must research them in detail first before you decide to take out a loan. They are usually not trustworthy, or their loans are not what they seem.
Finding the Right Loan
Rather than looking for no credit check loans, which do not exist from reliable and FCA-approved lenders, a better option for you is to choose a bad credit loan in most circumstances. These are usually from trustworthy lenders and will allow you to borrow money without any issues. However, before you take out any loan, you should always get a quote from lenders to make sure that you can afford to pay it back and research the loan company in question to check that you are not making a mistake. Bad credit loans will then allow you to boost your finances if you are desperate for a loan without having to fall foul of a loan whose lender’s claims are nothing but false.