Can I get a loan without a credit check?
Credit checks are required when applying for loans in the UK but even if you have a low credit score or poor credit history, you might still be accepted.
Key takeaways:
A full credit check and assessment of your financial situation is needed to apply for a loan in the UK
Lenders use data from credit reference agencies (such as Experian, Equifax, and TransUnion) to decide whether to lend money to you or not
Specialist lenders offer bad credit loans but these are usually more expensive and eligibility factors apply
Do no credit check loans exist?
Getting a personal loans in the UK is impossible without a full credit check. This is a legal requirement to make sure lenders are being responsible and not giving money to people who can’t afford to pay it back. But if you have a low credit score, there could still be options for you.
Why do lenders have to check credit reports?
It doesn’t matter whether you’re getting an emergency loan, a bad credit loan or a standard loan, all legitimate and regulated providers that lend money in the UK will carry out a credit check and examine your credit history when you apply.
Lenders are not just being nosy when they peek into your credit history. They use credit checks to assess how reliable you are when it comes to repaying borrowed money.
The information they gather from credit reference agencies like Experian, Equifax, and TransUnion, in the form of your credit score and credit report, can significantly influence the terms of your loan, including interest rates and repayment periods.
This also safeguards you as a borrower because you don’t want to take on more debt if it puts your finances at risk.
So, while credit checks may make it more difficult for you to be accepted for a loan if you have a bad credit history and have had previous financial difficulties, they're there to help make sure you can afford to borrow.
There are also specialist bad credit lenders out there who specifically work with people in complex financial situations, who may have late payments or missed payments on their credit file.
As with all types of loans, you'll need to be a UK resident and have a bank account to be considered for a bad credit loan too.
What happens in a credit check?
Credit checks are the financial equivalent of a background investigation into your past borrowing and repayment behaviours.
Lenders will look at your credit history, through one of the main credit reference agencies, and they will usually have their own set of checks to carry out too.
These are a critical tool for lenders, providing insights that help prevent borrowers from taking on debt that may be unmanageable for them. Especially those who may already have a bad credit score.
It's a protective measure for both the lender and the borrower, ensuring that the terms of any financial agreement are sustainable.
It's for this reason that you no credit check loans are unavailable in the UK.
Can I apply for a payday loan without a credit check?
Many people with a bad credit score may look to payday loans if they’re not eligible for a loan from a mainstream lender.
However, in the UK, payday loans are regulated by the Financial Conduct Authority (FCA), which requires lenders to assess creditworthiness and loan affordability before lending money. The FCA has a list of all registered lenders on its website.
This means that a credit check is an unavoidable part of the process for a payday loan, or any other type of short-term credit.
Soft credit checks vs. hard credit checks
Soft credit checks
Soft credit checks are used for pre-approvals and eligibility assessments for rates and products when you're looking to borrow money.
They do not leave a mark on your credit score, won’t be visible to other lenders, and have no impact on your credit history.
Our loan eligibility checker uses soft searches and will give you an idea of your chances of being accepted for different loans, if you've got poor credit.
Hard credit checks
Hard credit checks are recorded on your credit report by a credit reference agency and can impact your credit rating.
If you're shopping around for a new loan and you make multiple hard checks in a short period, it can impact your credit score because it can suggest you are struggling to manage your credit.
Can I get a loan with bad credit?
If you have a poor credit score, it can be harder to be accepted for credit than a person with a good or excellent credit score. However, it’s not impossible, but you may be offered a smaller amount and a higher interest rate.
There are also lenders that specialise in loans for bad credit, but even these lenders will need to see evidence of your financial situation and your income.
Secured loans
Secured loans require you to put an asset on the line, but might be worth investigating for people with bad credit histories. A secured loan may offer more attractive interest rates, but the stakes are high—if you default on your loan repayments, your asset is at risk. So it's vital you weigh up the downsides before take on a secured loan.
The alternatives to a bad credit loan
There are several alternatives to consider, if you’re not accepted for a loan or if the interest rate is too expensive. They include the following:
Guarantor loans
Guarantor loans are an option for people with a bad credit score, as well as a safety net for lenders through a guarantor. However, tread carefully as this type of personal loan often carries a high interest rate (annual percentage rate).
Credit unions
Credit unions often offer favourable interest rates compared with payday loan companies and other specialist bad credit lenders, and other responsible lenders for alternative options.
Borrow money from loved ones
Borrowing from friends or family members is an option for some, although this can lead to problems if the debt isn’t repaid.
Where to get help if you’re struggling with debt
If you’re currently struggling with paying off debt and find it difficult to make your monthly payments, there are several free and independent debt charities that can help. They include:
How to boost your chances of being accepted for a loan
The best way to improve your chances of getting a loan at a favourable rate, is to increase your credit score. This isn’t something that can happen overnight, but in time if you follow the correct steps your credit score will improve. Here are a few ways in which you can give your credit score a boost:
Join the electoral roll
Make sure all debt payments are made on time
Try not to use all of the credit available to you
Regularly check your credit history to spot for any errors
Other useful guides
Here at MoneySuperMarket, we have a range of guides to help you understand loans and credit.
Comparing loans for bad credit with MoneySuperMarket
Compare bad credit loans online with MoneySuperMarket and let us take the anxiety out of borrowing money.
We compare poor credit loans from a wide range of lenders across the market using a ‘soft search’, meaning your credit score won’t be affected.
We'll show you your chance of being accepted and if you're pre-approved for a loan, you know that if you apply, you’ll be accepted.
The loan amount, monthly repayments, duration, repayment schedule and interest rate are all confirmed as key parts of loan agreement/credit agreement. And you can rest assured you won't be hit by any hidden fees, too.
MoneySuperMarket is a credit broker – this means we’ll show you products offered by lenders. We never take a fee from customers for this broking service. Instead, we are usually paid a fee by the lender – though the size of that payment doesn’t affect how we show products to customers.
Author
Rebecca Goodman
Personal Finance & Insurance Expert
Rebecca is an award-winning financial journalist with over a decade of experience writing for print and online media. Her mission is to take the jargon out of personal finance and to help everyone...
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Collette Shackleton
Content Writer
Collette Shackleton is a highly skilled Content Writer who has over nine years’ experience creating helpful and engaging personal finance content for consumers. Collette shares her experience as a...
