When you are wanting to borrow money but aren’t sure if you have the credit rating to do so, you may be tempted to find lenders who will not conduct a credit search. However, as it is a responsible lending requirement, many lenders will still need to check your credit history. So, to help, here are 5 finance tips for when you are looking for no credit check options.
- Choose Only Trusted Lenders
You may find lenders offering to provide no credit check loans, however, they may not be authorised by the Financial Conduct Authority (FCA). As you could be borrowing a significant sum of money, it is important to only use trusted sources so there are no surprises, and you are treated fairly as a customer. If you are unsure when looking at suitable direct lender loans, you’ll be able to see their FCA authorisation number and find the lender on the FCA register. The good news is many trusted direct lenders will consider business loans for bad credit, meaning whilst they will perform a credit check, this will not be the only deciding factor. Instead, they will focus on what you can afford to repay each month and that you are not in financial difficulty currently.
- Ensure You Have the Affordability
Once you have found a direct lender, you need to ensure the loan you want is affordable now and can be maintained every month. Even lenders who specialise in bad credit will still decline your application if they cannot see it is affordable for you. Review your current finances and determine how much disposable income you have and are comfortable putting towards loan repayments.
- Check Your Credit Report
If it has been a while since you have fully looked at your credit file, or you have never done so, it’s a good idea to check regularly. If you have a bad credit history, you’ll want to see how this is affecting your current score and how lenders see you when performing a credit check. This will help you understand why you are being declined and what you can action to start improving your score. It could be as simple as updating your address history, personal details or asking the Credit Reference Agency (CRA) to remove any inaccurate information, such as a loan agreement still showing as active when it is settled. Some changes can take time and may require proof for the CRA to action for you.
- Carefully Check the Repayment Terms
Checking the terms of your potential loan agreement before proceeding is a vital stage. You do not want to agree to anything that you’ll later change your mind on so fully checking the terms including the repayment value, the term length and the interest charge is advisable. This is important with loans that provide no credit check as some lenders may charge additional fees or higher interest than others. Fortunately, most lenders are transparent with this information and some charge no fees at all, so take the time to fully review the agreement before signing and question anything you are unsure about.
- Apply Only When You Have No Other Options
Lastly, taking out further borrowing should only be an option if you have no others. Check to see if you have any savings you can use instead, especially if it is a short term position you are in. Also, you may have available credit already you have not used, so double-check any existing agreements. If you have exhausted all other avenues including asking for help from family and friends, carefully find an authorised lender that will offer you the flexibility you need. This will ensure you can comfortably afford the loan you want and have no problems maintaining it throughout the term.