Credit Checks are Essential to UK Lending

Credit Checks are Essential to UK Lending

A lot of people assume that online loans without a credit check would allow them to get the money that they need without worrying about their credit history or the impact it will have on their lending options. However, the truth is that while online loans with all the benefits mentioned above do exist, online lending without a credit check is not available in the UK.

Ultimately, whether you like it or not, you’re going to need to have a credit check if you want to borrow money. The Financial payday loans in Illinois Conduct Authority – the group in the UK responsible for regulating loan providers and lenders, demand that every credible loan provider conduct a check to ensure that the people borrowing from them can actually afford their loan.

If your loan provider doesn’t conduct a credit check, then they’re not only taking on a greater risk themselves, they’re also putting you and your finances in danger too.

Responsible lenders will always conduct a check, which often involves looking at the basics of your credit history. That makes it confusing when you see people online claiming to offer an online loan in the UK without a credit check. However, more often than not, these lenders are letting you know that you can get a loan without going through a hard credit pull first.

Basically, there’s a difference between someone checking your history with a soft credit check, and diving into your entire spending background. To fully complete your ?1000 loan application, your lender will need to conduct a hard credit pull. However, before you commit to a lender, you can make sure that you’re going to be approved for your loan by allowing the company to conduct a soft credit check.

With a soft credit check, brokers like Boutell can help you to find the right lender for your needs, without leaving any marks on your credit score.

What do Online Loan Providers Look For?

This means that the kind of information that your lender looks at might differ from one loan to another. Usually, when a lender conducts a soft credit check to see whether you’re eligible for a loan, they’ll look into your history to find out whether you’ve ever been the victim of bankruptcy, or if you’ve ever defaulted on your loans. Most online and payday lenders will also examine things like:

  • Your identity and address: Loan providers need to make sure that you’re at least 18 years old so you can take out a loan. They’ll also need to check that you’re living in the UK, and that you’re a resident of the country.
  • Your monthly income: Your lender will need to be sure that you can afford the repayment terms for your loan. Even if you’re only borrowing a small amount of money, a regular income each month will help you to successfully receive your loan.
  • Employment history: Steady employment is often crucial to getting a payday loan. Your loan provider will check that you’ve been in your job for at least a few months before giving you any extra money.

When a lender claims to offer a no credit check loan, what they mean is that they’ll take the basic information above from a soft assessment of your history. From there, they’ll be able to tell you or your broker whether you have a good chance of being accepted for a loan.

All online loan providers have their own terms and conditions in place

Since one of the bet things you can do to protect and improve your credit history is make sure that you don’t apply officially for too many loans at once, a soft credit check can ensure that you don’t get any dangerous age your future lending opportunities. One way to think of soft credit searches is a kind of pre-approval process, intended to ensure that your credit rating doesn’t suffer any more than necessary during the loan application process.

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