Can you get an unsecured loan with no credit check?

If you have a bad credit rating, borrowing money could be actually tricky. A credit check is the first and most important step to ensure you can repay the debt. No lender will lend you money unless you prove that your past payment behaviour was good enough.

However, falling behind the payments will pull your credit points once you have fallen behind. Missed payments will stay on your credit report for up to two years. If you have made a permanent default, it will show up for up to six years, regardless of settlement. 

Though lenders bother about the latest defaults, once your credit score falls within a poor credit range, you will have difficulty getting approval for a loan. If a lender signs off on your application, you will get it at higher interest rates.

Doorstep Loan

However, some lenders may allow you to borrow money without a credit check. Are they any specific type of loan or an unsecured loan with no credit check?

What are unsecured loans?

An unsecured loan is a personal loan. It is not need to collateral, meaning you can borrow money without putting down security. If you make a default, there is no risk of losing your valuable asset. 

Unsecured loans are generally small. Their repayment length is not more than 18 months. When you apply for these loans, a lender runs a credit check. They are typically signed off on only when you have a good credit score. 

Does it mean you cannot get unsecured loans without a credit check?

For unsecured loans no need collateral or any asset, and therefore, it will only be possible for a lender to approve them with you having a good credit score. However, there is an exception to this rule. If you borrow a small amount of money for emergencies, you can get them without having hard search footprints.

These are a form of unsecured loans, but they are known as no credit check loans. The loan amount of these loans is not too big. The maximum amount you can borrow based on your repaying capacity is not more than £1,000. 

If you are looking to borrow more than it, you will have to undergo a credit check. As a lender does not run a credit check, they cannot be so sure about your lending capacity. This will lead to result in higher interest rates. 

No credit check loans are very small loans, so they are repaid in a lump sum. The repayment length of these loans cannot be more than two weeks. Loans with no credit check are also known as payday loans. 

These are aimed at funding your emergency expenses only. If you apply for these loans to meet recurring expenses, you are making a big mistake. You can fall into debt if you fail to repay the debt.

Further, the nature of expense will prompt you to borrow money over and over, and as a result, you will end up mounting up the debt. 

Door-to-door loans without a credit check

Even if you need funds for small emergencies, loans with no credit check can be very expensive. Interest rates could be very high, and if you fall behind the repayment, you can fall into an endless circle of debt. 

This is why it is suggested that you should carefully examine your repaying capacity before taking out these loans. Some people prefer door-to-door service. They could be even more expensive because of extra fees for handling and collecting money on your door. 

Door-to-door loans with no credit check are aimed at the disabled and retired. You can apply for these loans even in the absence of a functional bank account. The representative of a lender will discuss everything – your credit requirements and income – on your doorstep. 

If it is found that you can manage repayments, the representative will hand in money on the spot. You will be told to make weekly or lump sum payments based on your income. However, if you are not comfortable making the outright payment, you can opt for weekly payments.

It is crucial to note that the lender would charge fees for arranging funds, handling and collecting payments on your doorstep. 

How can you take out unsecured loans at affordable interest rates?

If you are looking to take out unsecured loans, you should focus on doing up your credit score first instead of seeking an option of borrowing money without a credit check. In order to improve your credit score, you should follow the following tips:

  • Try to make all your bills on time, including energy, water, rent, and credit card bills.
  • Avoid utilising more than 30% of your credit card limit.
  • The debt-to-income ratio should not be more than 25%.
  • If you have a default, you should settle it even if it is going to stay on your report for up to six years.
  • Do not borrow money back to back, as it shows you often rely on loans for your regular expenses as well.
  • Consider using credit builder loans so you can build your credit rating.

Once your credit score has improved, you should do research. Each lender charges different interest rates. Knowing them beforehand is a must, so you apply to a lender that offers the best deal. Ensure you borrow money from a lender that allows you to pay it down in weekly instalments. 

The bottom line

You can get an unsecured loan with no credit check, but only if you are not borrowing more than £1,000. However, these loans could be very expensive. A rule of thumb says that you should instead improve your credit rating and then try for these loans. 

You are more likely to get money at affordable interest rates. Do proper research, so you get the best loan deal from a lender.

Karan Singh

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