Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk
Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk

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No to no credit check loans

Why borrow money from a lender that won't check if you should?

If you rewind a few years you may remember, or you may even have applied for, a “no credit check loan” or a loan that was advertised as having no credit checks. Was this sensible for anyone? Was it sensible for you as a customer? Was it sensible for the lender themselves?

Why would you, as a borrower, want a loan that says they do not check your credit history? Probably because you feel you will be declined. Why do you feel you would be declined? Probably because you either have a poor credit history of repaying loans or credit cards – or you have too many loans, credit cards or store cards already.

Some people borrow money without any thought at all for their long term financial future. Give careful consideration when applying for a loan - you are committing to borrowing a set amount of money, over a set period, with specific payments every single month.

Why would a lender offer a no credit check service?

If you look at the reasons why you want a loan that doesn’t check your credit rating – surely you then need to ask yourself if you really should be borrowing at all? The reason credit checking is carried out is to protect the customer from getting themselves into a financial mess – and to protect the lenders money so it increases the chances of the loan being paid back. If you’re looking for a no credit check loan – you probably shouldn’t be looking for a loan at all.

Why would a loan lender want to offer a loan advertised as no credit check? The answer to this question is more difficult. In reality, despite the reasons above, there are many people that do search for a loan that offers no credit checks – so it can be used as a marketing tool. You also have to consider that if someone is desperate for a loan, irrespective of whether they should be taking out further borrowing or not, then there is a good chance that they’re prepared to pay more for it. You therefore have a marketing tool and the chance to charge more – what is there not to like for a lender? Naturally with this high risk strategy of lending there comes problems – and this is normally that lenders default a higher amount than normal – as they should not be borrowing in the first place.

Due to recent regulatory changes any legal, regulated, lender will check your credit history - as well as carrying out other searches to check you are who you are. They do this for good reason to ensure that you, and they, are protected and that neither of you run the risk of being financial disadvantaged, either short term or long term, by the loan you are applying for. Some lenders will, for example, look at a consolidation loan application and make sure that you use the new loan to clear existing loan or credit card debts - more often than not they will pay your existing debtors themselves to make sure that this happens.

Thinking of searching for a “no credit check loan”? Stop. Consider why you have got to this stage with your finances and whether you really should be borrowing at all. There are various debt charities and also your local Citizens Advice Bureau may be able to help you with advice.

If you are looking for a loan - and you have considered your long term plans - you can check, and compare, online unsecured loan lenders here: http://www.everythingloans.co.uk/compare-unsecured-loans

If you feel than you need help with your existing debts then get free debt help from companies such as: http://www.stepchange.org/

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