Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk
The Competition & Markets Authority (CMA) conducted a payday lending market investigation report on February 24, 2015. On the topic of credit checks, it was noted that customers are typically ineligible for a loan if they don’t undertake a credit check. Furthermore, if customers shop around for loans online, they are likely to be subjected to multiple credit checks, which are detrimental to the process. It’s a double-edged sword for UK borrowers. Since so many lenders evaluate borrowers based on their credit score, it can prove disingenuous to check your credit score with several lenders. That’s why the CMA recommended back in 2015 that lenders and the Financial Conduct Authority (FCA) allow more flexibility to borrowers to shop around without their credit scores taking a hit.
Many UK borrowers applying for lines of credit with payday loans providers actually have existing credit facilities available. An estimated 50% of all customers at payday loans companies had used a credit card in the last year, and approximately 50% of them had access to overdraft facilities as well. This indicates that they have already undergone credit checks to be approved for these lines of credit. This begs the question: Is it possible to qualify for loans without credit check screening? With rising household debt, many individuals and families are rightly concerned about adversely affecting their credit score with additional checks for small GBP loans.
Payday lenders are obliged to disclose all pertinent information regarding how they process and approve borrowers in the UK. The FCA mandates as much. The CMA has recommended to the FCA that it work in conjunction with payday loan companies to allow greater use of quotations services so that borrowers don’t get the short end of the stick when they shop around for loans online.
The risk of default on loan repayments to people with bad credit is the reason why banks and financial institutions are reluctant to approve loans. However, many folks have experienced difficulty at some point or another. This may adversely affect your credit score, making it a little more difficult to obtain the necessary financing for your needs.
While High Street banks may prefer to adopt a hands-off approach to people with bad credit, this created a vacuum in the financial landscape which loan providers, that don’t require a credit check, are now happily filling. Several licensed and regulated payday loans lenders cater expressly to people with poor credit. However, there are certain requirements that must be met, such as you must be 18+ years of age and gainfully employed. These flexible loan options make it easier for people struggling to make ends meet. Direct loan lenders that work with those with bad credit have gained prominence in recent years, and for good reason.
1. You may wish to consider a credit union.
2. You may wish to borrow from friends or family.
3. You may wish to ask a friend or family member to sign surety on a loan for you.
4. You may wish to consider legally selling unwanted or unused assets for quick cash.
5. You may wish to take on additional work, or get higher-paying work to pay the bills.
These options are always available, but they come with a downside as well. It is often damaging to take out loans from friends and family, or to expect them to sign surety for you if you cannot make good on the repayments. That’s why it’s always best to find a short-term loan provider, and to check how payday loans compare with the above options. The good thing about taking out a loan, even if the APR is higher is that it will help you to establish a better credit score over time.
Secured credit cards with your local bank or credit union are a good place to start. As your credit score improves, you will be able to apply for personal loans at improved rates, thereby mitigating the difficulties you faced with bad credit scores. Several online lenders do not require you to complete a credit check, but you will be required to provide evidence of income (paycheque, and proof of ID). While the APRs are higher on these types of loans, they can really help you in a bind by providing you with financing and helping you to build a good credit score over time. As your credit score improves, getting a loan will be easier, and the loan application process will not be stressful. In the meantime, financial responsibility and smart money management can lead you to where you want to be financially and possible not needing a loan at all.