What is a loan credit check?
If you want to borrow money, you’ll first need to pass a lender’s credit check - a review of your financial behaviour to see how responsible you are with money.
It will typically look at whether you repaid any previous loans or credit cards on time, how much existing credit you have and how well (or otherwise) you’re looking after your payments.
There are two types of credit check to look out for:
A soft credit check
These are initial checks that don’t affect your credit score.
A soft credit check can be carried out by a broker or lender, for example, to see if you’re likely to be eligible for credit and give you an idea of what rate you might get. They’re sometimes used by companies such as mobile network providers and employers to perform background checks.
You can also view your own credit report, which will appear as a soft credit check.
When you use our loans eligibility checker, only a soft check is carried out, which won’t affect your credit score.
A hard credit check
A hard credit check is when a lender reviews your full credit record as part of a formal loan application. Hard checks can have an impact on your credit score.
Are ‘no credit check’ loans allowed?
You can’t take out a ‘no credit check’ loan in the UK. All lenders regulated by the Financial Conduct Authority (FCA) must perform credit checks when you borrow.
While it might sound scary, a hard credit check is actually very important as it can help prevent you from being stuck with a loan you’d struggle to repay.
It also means lenders can't just offer loans to everyone regardless of their financial situation.
FCA guidelines make it clear that lenders must not state or imply that ‘credit is available regardless of the customer’s financial circumstances or status’.
What if I see adverts for ‘no credit check’ loans?
You may well find 'no credit check' loans touted online and elsewhere, often promising quick cash without the need to go through an approval process.
But since ‘no credit check’ loans are not permitted by the UK regulator, you should treat any advert offering such a deal with great caution. If you were to take out money in such a situation, you could find you don’t have the same protection as with a regulated firm.
If you have any doubts, check the Financial Services Register to search for regulated companies and their status, and see which activities they're authorised to do.
Alternatives to 'no credit check' loans
If you'd like a loan but are worried you'll be refused due to having a poor credit score, you could explore these alternatives:
Credit unions
These member-owned financial cooperatives often offer more flexible lending criteria, but in return you may have to pay a membership fee and deposit a minimum amount into a savings account each month. Membership fees might range in price from £10 to £30 a year.
Guarantor loans
Guarantor loans require a guarantor, usually a friend or family member, to co-sign the loan. This means they're liable to cover the repayments if you’re unable to do so, making you less of a risk to lenders.
Peer-to-peer lending
Peer-to-peer lending involves borrowing from individuals rather than traditional financial institutions, sometimes with more relaxed credit requirements.
Lines of credit
A ‘line of credit’ is another way to borrow a small amount of money. Some lenders will let you borrow up to £3,000 without any fees, only charging interest on what you use.
However, this type of credit can have high interest rates, which means you could end up paying much more than you borrow in the first place.
Can I get a loan if I don't have any credit history?
Having no credit history can make it challenging to secure a loan, but it's not impossible. Some lenders specialise in offering loans to those with limited credit history, often at higher interest rates.
Find out more about bad credit loans.
Will I pass a loan credit check?
Passing a credit check depends your credit score, income, and any existing debts. It's always worth checking your credit report and addressing any issues before applying for a loan.
The typical reasons for failing a credit check include missed or late payments on mortgages, loans, or credit cards.
Where to get help if you're struggling with debt
If you're facing financial difficulties, it's important to seek help. Organisations such as StepChange and Citizens Advice offer free debt advice and support.
FAQs
Is it possible to borrow money without a credit check?
You can’t take out a loan without a credit check if you borrow from a lender regulated by the FCA.
Some companies may claim to offer this type of loan, but you should always be very cautious of such offers. You’ll likely have less protection and could get into serious financial difficulty if you fall further behind.
The FCA’s Consumer Duty works with financial firms to make sure everyone is treated fairly. If in doubt, make sure the lender is regulated by the FCA and – if it is – check to see which of its services are authorised.
Can I get a loan without it showing on my credit report?
It's usually the case that all loans will appear on your credit report, except student loans.
Student loans don’t appear on your credit file, so they don’t affect your credit rating. But if you get a mortgage, lenders may consider your student loan when deciding how much to lend you.
What is a hardship loan?
A hardship loan is designed for individuals facing financial difficulties. These loans often have more flexible terms and are intended to provide temporary relief if you need help to cover household expenses such as food and bills.
These loans are provided by the Department for Work and Pensions (DWP). You can contact the DWP by:
updating your journal in your Universal Credit Account
calling your nearest Jobcentre
calling the Universal Credit helpline.
Find out more about financial support at Gov.uk.
Should I consider loans with no credit check?
While the idea may seem appealing, it's important to take every caution with such offers. This type of loan isn’t offered by lenders regulated by the FCA.
These loans often come with higher interest rates and fees, making them more expensive in the long run. Taking out such a loan could put you at risk since these lenders are unlikely to offer the same protection as those regulated by the FCA.
Can I get an emergency loan without having my credit checked?
Emergency loans require some form of credit check. However, alternative lenders may offer more relaxed criteria for urgent financial needs.
Before applying for an emergency loan, it’s worth considering the interest rate, whether you can afford to pay back the loan on time with added interest, and what happens if you can’t repay the loan.
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