Published on May 28th, 2015 | by Pete0
Can I Borrow Money Without A Credit Check?
When it comes to applying for a loan, some people are concerned about failing the credit check that generally decides whether or not you are eligible.
You may be worried about your poor credit history letting you down; or even the fact that repeated loan applications can have a negative impact with future lenders.
Here, we explain why credit lenders perform credit checks and how to borrow without the need of a credit check:
What exactly is a credit check used for?
• Credit checks are used by potential lenders to identify whether a person meets the standards for borrowing money.
• During a credit check, the process includes consulting credit agencies that have a record of your credit file to decide if the lender should accept your application.
• A credit file is built when someone borrows money and pays it back. It documents any applications you make for credit, and whether your repayments were timely or missed. It also provides the lender with a credit rating – a numerical score that creditors use to access your credit worthiness.
• The whole purpose of the credit check is to protect both the lender and the borrower from fraud.
What if I have a poor credit rating?
People with a poor credit rating might worry that any loan requiring a credit check could be denied to them.
However there are certain loans designed for people who are classed as ‘high risk’ borrowers. These loans are known as subprime loans. If you have a poor history of defaulted payments or County Court Judgements, for example, then you could be granted the loan. However, it is likely that the APR interest will be prohibitively high so it is advised to proceed with caution.
Too many applications and your credit score
Frequently applying for credit, even if your applications were all unsuccessful shows that you are trying to borrow an unaffordable amount.
A credit check generally remains on your record for at least 3 months; therefore after one failed credit check, many people are advised to refrain from reapplying for credit that requires a check within that time period.
So what do you do if you require the money but the credit check lets you down?
The alternatives to a credit check
There are loans that don’t require a credit check from the lender. These loans offer more convenience and flexibility than conventional loans. Some may have higher interest rates.
Many payday loans don’t require a credit check and due to being an unsecured loan (with no collateral) there’s a much higher rate of interest (sometimes over 1000%). These loans are designed as a short-term financial solution. Ideally they cover a small amount of time before you next get paid and nothing more.
The high rate of interest on a payday loan may cause further financial difficulty. Many struggle to make their repayments and need to seek out help from charities – Step Change reported that in 2013 they had helped 30,762 people struggling with payday loans between January and June. The figure grew across the same period in 2014 as the charity aided 43,716.
Another solution to borrowing money without the need for a credit check is a V5 Logbook Loan – which gives you more flexible terms on repayment.
By using your car at collateral, a logbook loan allows you to release the value of it, while continuing to drive – And then once the loan has been cleared, your logbook is returned to you.
The key thing to keep in mind here is you don’t have to give up your car unless you fail to meet the repayments meaning you can keep driving. Also due to having a form of collateral this sort of loan offers a lower rate of interest than a payday loan.
A logbook loan repayment plan ranges from 3 months and 6 years with settlement options and terms that are often much more flexible than those offered by payday lenders. The average loan size from the logbook loan provider, Auto Advance, is around £920 over an 11-month period.
This is a sponsored post created on the behalf of Auto Advance.