Your credit score speaks volumes about your financial behaviour. A credit rating is the foundation stone of lending; no lender can make a lending decision without perusing it, which suggests that chances of getting the nod are high when your credit rating is up to scratch and low otherwise. In the event of a bad credit rating, which does not necessarily have to be the result of missed payments, borrowers often seek to skip hard checks.

It is no wonder lenders will make you jump through hoops when you apply for a loan with a bad credit rating. It calls your credibility into question and raises concerns about on-time payments. No lender can sign off on your application without a thorough check of your affordability, which involves hard checks that leave search footprints on your credit report. Each inquiry will pull a few credit points.

What if you need money now, and your credit rating is already bad? You might not want another blow to your credit score. A new credit inquiry will be another turn of the screw. No credit checks become a good option, but there is more to it than meets the eye.

No credit check facility is not widely available

A bad credit loan can be small or large. A no credit check facility is not available from all lenders. Most of the lenders are registered with the FCA and they will never let you borrow money without a credit check. It is necessary for a lender to ensure that you can repay the debt on time, and hence, they will carefully look at your affordability, which includes a thorough check of your credit report and income sources.

A few lenders are out there who can offer you no credit check loans, but they cost you “an arm and a leg”. Because a lender will be sceptical about your repaying capacity, they will charge you very high interest rates. It is vital to note the fact that you cannot be eligible to borrow a larger sum when availing yourself of a no credit check facility. These loans generally consist of a very small sum, not more than £1,000. In addition, you are supposed to pay back that money in full by the due date.

It can be hard to pay back the whole sum in full because the repayment period does not last more than a month. You are already in financial trouble, so you are highly likely to fall into debt. Once you fall into an abyss of debt, you will be imposed late payment fees and interest penalties. The higher the debt, the more difficult it will be to get out of it. Your credit score will further plummet, removing the scope for borrowing money at lower interest rates down the line.

In order to avoid this situation, you should contact lenders who run soft credit inquiries. They do not appear on your credit report, and therefore, there is no risk of losing your credit points. Before you apply to a lender in the first place, you should always ensure that the lender runs soft checks. You can contact them to learn about their lending criteria if you do not get sufficient information on their websites.

Large bad credit loans cannot be approved without a credit check

Bad credit loans can be large as well. The repayment period, in that case, can be between six months and 18 months. You are required to repay the debt in fixed monthly instalments. The deal will be offered at relatively lower interest rates than small bad credit loans. However, your credit history will be thoroughly checked, and search footprints will appear in your credit file.

A lender is obligated to perform a credit check and evaluate your income source before deciding on your loan application. You will lose a few credit points when you apply for a loan application; however, make sure you do not put in requests to multiple lenders because each will run hard credit checks and, as a result, you will see a sharp drop in your credit rating. In case you have been turned down, you should wait for some time to apply to a different lender.

However, it is vital to bear in mind that this drop is temporary. Your credit score will bounce back after you make a few instalments on time. One of the benefits of using long-term bad credit loans is that they help you improve your credit score. Paying all instalments on time will demonstrate that you are sticking to your payments. It will have a positive impact on your credit rating.

However, note that no credit check loans are very small, and they are paid back in a lump sum, so they cannot give enough details about your payment behaviours despite the ups and downs, and, therefore, they do not contribute to your credit score. Even if you settle the whole debt on time, your credit rating will remain the same as it was before applying for the loan, but credit reference agencies will immediately be informed if you fall behind on payments.

You should avoid using no credit check loans

You should always try to contact a lender who runs a credit check. It ensures you will not get extortionately high interest rates. If your credit rating is too bad, you should still contact a lender who runs soft checks. There is still a possibility of getting a loan at competitive interest rates. Loans without credit checks are normally not available from registered lenders. You should never make the mistake of borrowing money from an unregistered lender because otherwise, you will fall into a deep hole of debt.

Wrapping up

You can get bad credit loans with no credit checks, but they will be a paltry sum that requires you to pay off the whole sum on the due date. The risk of falling into debt is too high with these loans because of very high interest rates. You should normally borrow money from a lender who runs soft credit checks.