What is a no credit check loan?
A lot of people search the web for “no credit check loans” in the hope that such a loan exists. However, the UK’s Financial Conduct Authority (FCA) requires that all lenders perform a sufficient assessment of the creditworthiness of an applicant before entering into a regulated credit agreement. So, a lender will always credit check an applicant. There are two forms of credit checks a lender can perform – a “hard” credit check and a “soft” credit check.
A soft credit check allows lenders to review basic information about an applicant that allows them to make a safe lending decision – this will apply to simpler forms of credit of a typically low value (e.g. short term loans). Such checks are not recorded on an applicant’s credit file.
A hard credit check goes deeper into an applicant’s credit file and is itself recorded on the file. Too many hard credit checks in a short time become a negative flag to credit providers, and so frequent searches should be avoided.
Lenders will turn an applicant’s financial history into a credit score. It’s often this score that can undermine the lending decision. However, we have a series of loan options where the lending decision is more dependent on an applicant’s current status than on their credit rating.