Can I Get a Payday Loan With No Credit Checks?

No, a payday loan will usually only be approved after some basic credit checks have been run. Using a credit reference agency such as Experian or Equifax, the lender will run a credit check against your name and by looking at your credit history, they will be able to determine whether or not you are right for the loan.

We understand that people might be searching for loans without credit checks, possibly because they are scared of being declined due to having bad credit. But if you need to borrow a similar payday loan amount of £200 or £500, there are some products that do not require traditional credit checks such as borrowing from family and friends, credit unions, logbook loans (secured against your car) or pawnbroker loans (secured against jewellery).

Why Do Payday Loans Require Credit Checks?

As part of the FCA regulation, it is a requirement by law that payday lenders have to run a credit check against a potential borrower. 

It is essential that a customer does not receive a loan that they cannot afford to repay, since this could lead to further debt problems and impact physical and mental health. Offering a payday loan without credit checks would be irresponsible lending and also illegal.

By running a credit check, a lender is able to see a number of important things about the person’s credit history, including how well they have repaid other types of payday loans, personal loans, credit cards, utility bills, phone bills and more.

If the customer has missed a number of recent bills and repayments, this could suggest that they are not the right person for a loan. The payday loan company has to manage the risk of whether it helps the customer and if they can afford to repay it. At the end of the day, the lenders are a business and by seeing a clear and consistent credit history, they feel confident that they can lend to the individual and get their money and interest paid off on time.

What Checks Are Run By Payday Loan Companies?

Payday lenders use credit reference agencies such as Experian, CallCredit, Equifax and TransUnion to run a credit check. This is all carried out instantly and the lender pays the agency a small fee for each search.

A ‘soft credit check’ is carried out which has a quick look at the borrower’s recent credit history and transactions. Being soft, it does leave a lasting footprint and disappears shortly after.

When a lender runs a ‘hard check’ this looks at a lot more information, including those individuals who have joint accounts with the borrower (such as spouses or partners) and the ‘hard footprint’ can stay on the file for several months.

Having search footprints on your credit report is not a bad thing and it is common to have around 12. But if you have hundreds, it could make you look desperate for finance and this information will be evident to lenders and be a potential warning sign.

Additional checks carried out by lenders include:

• Income and wage checks – what is the individual’s monthly take home
• Address checks – do they live where they say they do?
• Email and mobile phone checks – this is usually confirmed by electronically signing the loan agreement via a unique email link and SMS code
• Affordability checks – the lender needs to calculate how much you can afford to borrow and repay, taking into account your request loan amounts, income and any monthly expenses you have
• Phone call – some UK loan providers carry out a quick phone call to confirm your details before approval and funding

How Can I Get a Payday Loan With Bad Credit or No Credit?

If you would like to get a payday loan but are worried about being rejected due to poor credit or no credit, there are some things you can do to help.

For instance, having a stable income and employment shows that you have a regular salary coming in to cover your repayments. Being able to show proof of income and holding a job for a long period is very useful. 

If you have a poor credit score, the lender may look at your recent transactions – because if you have a murky history but your recent track record is good and your credit score is improving, this could certainly help your case.

Beyond this, you can take steps to improve your credit score. There are free trials available from Experian and other brands that show your credit score when you login and offer recommendations to improve it. Some basic things you can do include joining the electoral register to vote, paying off all your bills on time, disassociating yourself from joint accounts you share with people with bad credit and also closing down any cards and loans that you no longer need.

If you have no credit score or history, try getting some small credit cards or loans to build this up. There are credit builder cards which are designed for young people or those looking to improve their credit scores and involve borrowing smaller amounts that can build up your score if you pay them off on time.

Are There Loans With No Credit Checks Out There?

Yes, if you are looking for a loan with no credit checks, there are a number of options available including:

Credit unions – these non-profit organisations are more willing to take a view on bad credit and they usually help people in the local community. Most credit unions do not run credit checks and can offer loan amounts similar to payday loans. The only thing is that the loans can take a bit longer to fund than the instant payday loans that you might be used to.

Logbook loans – if you own a car that is less than 5 years old and is in good condition, this can be used as security to borrow money. Since the vehicle itself is used as security and the lender can always repossess this if you default it, it typically bypasses the traditional credit checks you associate with payday loans.

Pawnbroking – if you have jewellery or art, you can use this as collateral to borrow money. If you pay off the loan on time, you simply get your asset back. But if you default, the lender may keep the asset forever.

Borrowing from family and friends – Ideally the best method of borrowing and this is usually interest-free because it is from people who know and love you. Equally, because it is informal, there are no credit checks involved!