A loan that is sanctioned without a detailed evaluation of your credit rating is the no credit check loan.
You must therefore submit to a credit check if you wish to borrow money from a respectable company in a secure manner that also gives you access to the FCA’s consumer protections. You should not take out a loan from a lender who is not FCA regulated and authorised.
It makes perfect sense why some people might be hesitant to submit to a credit check. You could be worried that a credit check would cause your loan application to be rejected and further harm your credit score if you have a bad credit history or have made some financial blunders in the past.
The good news is that there are a few lenders on the panel, like Loanpig, who specialise in giving loans no credit check. Additionally, without harming your credit score, the application procedure enables you to determine whether a lender is likely to accept your application or not.
What a credit check is?
A credit check is an examination of financial data that one of the three UK credit reference companies has on you:
This assessment enables potential lenders to learn more about your credit history and provides them with information on how likely you are to repay a loan, which helps them assess the risk of lending you the desired amount of money.
There are two different sorts of credit checks, it is crucial to note. The distinction between a soft credit check and a hard credit check is described below.
What are hard credit checks?
A hard credit check is when a lender carefully examines your entire credit report.
When you ask for credit, a lender, bank, or building society will use this kind of check. Nearly every form of account you have with monthly payments is examined, including credit cards, phone bills, and mortgages.
They look at your credit report to determine if you have ever been behind on payments. They may typically ascertain your total debt load as well (that is, both your secured and unsecured debt such as mortgages).
Hard credit checks remain on your records for a year, though some—like debt collection checks—may last longer. Each business that examines your file can see who conducted those checks and why.
What is a soft credit check?
An inquiry into your credit file to look at specific information on your credit report is known as a soft credit check. Companies use soft searches to predict if your loan application will be approved without having to run a “hard” credit check.
To gain a quick indication, it functions like a background check. Soft searches have no effect on your credit score because they are invisible to other businesses.
Can you perform a credit check yourself before applying?
To check your credit score, you can always get in touch with one of the credit reference companies. This can be done without having a negative impact on your grade.