Credit Building > How can you get a loan in UK with no credit history or check?

How can you get a loan in UK with no credit history or check?

Wollit Team4 minute read · Updated 14th October 2024

In the UK, getting a loan without a credit history and no credit check can be quite a challenge. In fact, you can’t get a loan with no credit check at all.

This is because the Financial Conduct Authority (FCA) requires all lenders to run a credit check before approving a loan. The reason is simple: the FCA needs to make sure that you can afford the loan and that lenders are not taking on excessive risk or being unfair.

However, while it’s impossible to get a loan without a credit check, there are a few options if you have a poor credit history or even no credit history at all.

Can I get along with no UK credit history at all?

The short answer is yes, you can get a loan with no credit history. Some lenders actually specialise in providing loans to people with poor or even no credit history at all. They might charge very high interest rates and fees for it, but they do exist.

However, you will still need to go through a credit check. This is because lenders need to assess the risk associated with lending to you. Plus, lenders are also required by law to run a credit check before approving a loan.

This means that if you ever see a lender advertising a loan without a credit check at all, they might be either misleading or even operating illegally. You should be careful when dealing with such lenders.

How do I know if a lender is legit?

To make sure that a lender is legit, check for if they’re approved by the FCA and read reviews from other customers. Be very cautious of lenders that do not run credit checks.

Should I be concerned about a credit check?

A credit check involves a third-party checking your credit file from a credit reference agency to get a sense of how you handle debt and payments.

Your credit report includes details of your financial history, outstanding balances, and your ability to make payments on time. It doesn’t include details about how much money you have, whether you’re employed or self-employed, or how much you earn. It’s mostly limited to the history of your debt repayments, whether you defaulted on any debt, and what happened then.

You should also remember that there are two types of credit checks: soft and hard checks.

A soft check gives a quick surface overview of your credit history without affecting your credit score. It’s only visible to you, so lenders can’t see it..

A hard check, on the other hand, allows the lender to view everything included in your credit report, including current debt balances and payment history. Hard searches leave a footprint on your file for up to 24 months and are visible to every company that later accesses your report.

Credit checks are very important for responsible lending, and you shouldn’t be worried about them.

They help lenders assess the risk associated with lending to you. By reviewing your credit history, lenders can figure out whether you have a history of missed payments, debt, or other financial issues. This information can help them understand whether you can afford the loan and whether you are likely to default on the payments. This helps you as well, as you’ll want to only take debt you can afford anyway.

The only thing you could be slightly concerned about is the short-term impact of a hard credit check. A hard credit check can lower your credit score temporarily. Multiple loan applications in a short amount of time can lower it even more, as it can signal that you might be struggling and you’re looking for debt to cover basic expenses.

However, as long as you use an eligibility checker first, don’t make more than two applications within a six month period, and keep building your credit history, you should be fine.

Which lenders offer loans to people with no credit history in the UK?

Most of the lenders that offer loans to people with no credit history are the same that offer loans to people with bad credit.

They usually consider your application on a case-by-case basis, and care more about your ability to repay the loan rather than your past credit history.

However, the loans they offer do come with very high interest rates and fees, as the lenders want to be compensated for this extra work as well as for the extra risk they take by lending to someone without a known credit history.

Here are some of the biggest lenders and brokers which advertise loans to people with no credit history:

All of these lenders advertise a high approval rate and do not require a credit check to figure out if you’re eligible. You’ll only need to pass a credit check if you go ahead with the loan application.

However, one thing to keep in mind here: we don’t particularly endorse any of these lenders.

Their loans charge extremely high interest rates. While this is understandable considering the risk they take , this also makes their loans very risky for you.

If you can’t repay the loan as soon as possible, you’ll find yourself saddled with a growing debt which you might not be able to afford. This can end up hurting your credit history just as you’re starting to build it, and can lead to a cycle of poor financial decisions you might not be prepared for.

Most of the lenders we just mentioned charge representative APRs that often go over 1,000% per year. These are not loans to be taken lightly.

How can I build my credit history to get better loans?

Building your credit history requires you to enter credit agreements (like mobile phone contracts, credit cards, and loans) and handle them responsibly.

However, when you have no UK credit history, simply getting a basic mobile phone contract can be a challenge. The good news is that there are many specialised credit-building apps to help you do this.

One such app is Wollit.

Wollit is an app available both on Android and iOS, and it works by reporting a fixed-fee monthly subscription as a loan repayment to all three credit reference agencies.

This builds your credit history and helps you improve your credit score. A good UK credit history will increase your approval chances not only for personal loans, but also for other financial products, like current accounts with generous overdraft or credit cards with long 0% interest periods.

On top of this, Wollit can also report your monthly rent payment to Experian, adding another line in your credit report that shows lenders you're responsible and pay your bills on time. Eventually, this will help you get the products you need to make the most of your move to the UK.