If you have bad credit, you might be searching for a no credit check loan. You may have been turned down by more traditional lenders, and are therefore concerned that you won’t be able to borrow the funds you need.
While loans without credit checks don’t really exist, there are options available, regardless of your credit score. As long as you’re comfortably able to make the loan repayments, there are a number of lenders who offer bad credit loans. These lenders tend to put more weight on factors like your employment history than your credit history.
Soft Credit Search Loans
When lenders talk about ‘no credit check loans’ they are almost always referring to loans with a soft credit check. A soft credit check leaves no footprint on your credit file, while a hard check does. Too many hard searches in a short period of time can damage your credit rating. Before taking out a loan, it’s therefore a good idea to find out what sort of credit checks they undertake.
It’s also important to check whether brokers use hard or soft credit checks when you use their services. My Financial Broker, for instance, only ever use soft credit checks, so applying with us won’t affect your credit score.
Apply For a Bad Credit Loan
There are various types of bad credit loans available. Some lenders specialise in loans for people with a low credit score, while others are more concerned with your current financial situation than how you have managed your money in the past. We’ve listed some of the most common types of loan for people with bad credit below:
If you’re able to find someone you trust to be your guarantor – preferably someone with good credit! – you should be able to take out a guarantor loan despite a low credit score. Your guarantor must agree to make the due loan payments should you be unable to keep to the agreement.
A payday loan is generally only borrowed over a few days or weeks, and then repaid as a lump sum. This is typically when you next receive your wages – hence the name ‘payday loan’. As you pay back the loan in one full repayment, payday loans are typically only for small amounts.
Short Term Loans
If you’re looking to borrow a larger amount of money than with a payday loan, you can spread the /
. These loans are generally repaid over a couple of months or years, and you can borrow around £300 to £5,000.
Bad Credit Loans
Certain lenders have loans specifically tailored to individuals with bad credit. These lenders look mostly at factors like your income and expenditure, rather than focus on your credit score.
With all these types of loan, it’s important to note that the interest rate can be higher than for bank loans and other types of traditional credit. As people with poor credit histories are seen as more of a risk to lend to, and as the loans are unsecured (they have no collateral), the interest is adjusted accordingly.
Loans Based on Affordability
Short term lenders understand that often people have a poor credit rating due to factors outside their control. If you experience a difficult life event, such as losing your job, or taking extended leave from work due to illness, your finances probably won’t be your main priority. And if you fall behind with your repayments, an arrears marker will almost certainly be reported on your credit file. As such negative marks can stay on your credit file for up to six years, you could find it difficult to take out credit moving forward.
With short term loans, all credit histories are considered. Although the eligibility criteria will vary slightly from lender to lender, as long as you meet the below requirements, you should be able to get a short term loan:
- Be working full time or part time
- Be aged eighteen or above
- Live in the UK, and have a UK based bank account
- Own a mobile phone and have an active email account
It should be noted that if you currently have an active Debt Management Plan, have been declared insolvent or have more than one CCJ, it can be more difficult to take out credit. But as discussed above, some lenders specialise in bad credit loans, and these lenders may be able to help you get the money you need.
If you do have bad credit, it’s often a good idea to use a broker service when borrowing. A broker will take into account your affordability, and cross reference this with the eligibility criteria of a huge number of direct lenders. They will then put you in touch with the lender most likely to approve your loan application.
If you’re looking for a short term loan, but are worried about getting approved because of your credit history, My Financial Broker can help. We’ll do our best to match you with a suitable lender, so that you can cover any unexpected costs. And as we work on a commission basis with our lenders, our services are completely free for our customers.