Despite careful planning of your finances, it is always possible that an unexpected expense could leave you struggling until payday. For those who do not have access to savings or traditional forms of credit, such as overdrafts and credit cards, this can lead to a financial emergency.
This is especially true for those with a poor credit history, as they may struggle to access credit easily. However, some lenders are willing to consider lending to those with a poor credit history.
Can I borrow a payday loan without a credit check?
If you are looking for a payday loan with no credit check, it is unlikely you will find what you are looking for. This is because all lenders who are regulated by the Financial Conduct Authority (FCA) need to complete a hard credit check as part of their affordability checks. So if you have found a lender advertising a payday loan with absolutely no credit checks, they are unlikely to be offering a regulated, trustworthy and professional service.
However, even if you have a very poor credit history, if you can show that the repayments are affordable, you may still be approved by a regulated lender. This is because your credit history will show potential lenders a detailed insight into your financial history over the past six years. For example, if you have missed payments in the past but can demonstrate a recent commitment to financial management, your application may be considered. The lenders will analyse your income, outgoings and credit report to decide how likely you will be to repay the loan, with your credit report being only one of the factors they consider.
The importance of borrowing from a regulated lender
The Financial Conduct Authority requires all lenders to complete a series of affordability checks before a loan is approved. If you apply for a loan from an unregulated lender, these checks may not be completed, and there is a risk that the loan could cause you serious financial difficulties. In contrast, a regulated lender will complete a hard credit check and take a close look at your income, regular outgoings and average monthly expenditure. Without these checks, a lender could approve a loan, which you will be unable to repay. This can lead to missed payment fees, rising interest charges, and there will also be a negative impact on your credit score.
If you are looking to keep the cost of borrowing as low as possible, there is a cap on the rates which FCA regulated payday lenders can charge. For example, regulated lenders cannot charge more than £15 for a missed or late repayment. In addition, the interest can never amount to more than 0.8% per day, with the total amount of interest never costing more than the amount borrowed. An unregulated lender advertising no credit checks will not have to follow these rules, so there will be no cap on the amount charged.
The FCA also requires authorised and regulated lenders to offer fair and transparent loans to provide further protection to borrowers. In addition, if you borrow a payday loan from a regulated lender and you believe the correct checks have not been completed, or the lender is acting irresponsibly, it is possible to have the lender investigated by the Ombudsman.
I have a very poor credit score. Will I be approved?
If you face a temporary financial emergency, payday loans can be a useful form of borrowing for those who cannot access traditional forms of borrowing. Those who borrow bad credit payday loans rarely have a perfect credit score, so if the loan is affordable, you may be approved. Regulated lenders will always consider your credit score. However, if you have been making payments on time and it is clear the loan is affordable, there is a higher chance of approval.
If you have a poor credit score, it is advisable to only complete a single application to the lender most likely to approve your loan. This is because each time you apply for a loan or any other form of credit, the lender will complete a hard credit check. This check will leave a mark on your file for 12 months, which will be seen by anyone that completes a check of your file. Therefore, if you make multiple applications in a short space of time, it is likely to indicate to lenders that you are not borrowing responsibly, and your credit score is likely to decrease further.
Can a broker help me find a payday loan?
If you are looking for a loan quickly, it is worth considering the services of a broker. As a broker, every lender we work with is regulated by the FCA, and many will consider applications from those with a poor credit history.
We can match you to a panel of potential lenders based on how well you match their eligibility criteria. So, instead of undergoing multiple hard credit checks and wasting time searching for the best lender, we can match you to the ideal option. Simply complete a single quick application form on our website, and we will direct you to the best lender for your situation.
Here at Cobra Payday Loans, we understand that many people need access to flexible loans from time to time. This is why we have partnered with a range of lenders, which specialise in quick, flexible loans. As a broker, we can help you find a loan of between £100 and £5,000, with payment terms to suit you. The minimum loan term is one month, so if you are looking to repay the loan in full after your next payday, that is possible. Alternatively, our lenders can offer maximum loan lengths of 36 months, which will provide smaller, more affordable repayments for borrowers looking for larger amounts.
Whether you are struggling to pay for unexpected car repairs, home improvements, or your cash flow is simply a bit tighter this month, a payday loan could provide the cash boost you need.