Whilst it is no secret that the industry was established to help those with less than perfect credit get a financial lifeline when they needed it most, in 2016 the whole landscape has changed and those that do have a poor credit history are now finding it more and more difficult to get access to any type of credit, including payday and short term loans.
There is a very common misconception that anybody can get a payday loan, regardless of how bad their credit history is. This simply isn’t true and for the most part, it never really has been. Whilst historically, before the introduction of proper affordability tests, lenders were more willing to take risks with borrowers and in a handful of cases not all lenders actually performed a credit check, however these ‘no credit check payday lenders’ wouldn’t hand their money out to just anybody – you would still have to send in bank statements and pay slips to show you could afford to repay it.
Absolutely there have been instances of rogue lenders handing out loans irresponsibly and harassing borrowers to unacceptable levels and levying hefty fines (we remember one lender that used to charge the borrower £5 for every attempt they made at collecting the repayment from the debit card, it wasn’t unusual for them to attempt up to 40 times a day!) however we know from our experience that actually only around 7 in every 100 applications actually end up with a loan.
Since the introduction of the FCA regulating the industry, the whole market has changed in a way that 3 years ago would have been considered inconceivable. Lenders are less likely to take risks now and have updated their scorecards (a system used to assess the risk of a borrower – this can be tweaked to be more or less strict) to now make it harder than ever to get access to their loans.
Whilst it is still true that for the most part people that use these types of product would generally have a less than perfect credit score – and of course lenders know this – those with a particularly bad credit history will now find themselves alienated from payday loans leaving them next to no options at all. Lenders do not expect their customers to have a perfect credit history however multiple defaults and CCJ’s are now major red flags for more lenders – and rightly so.
A history of non-payment would indicate that the borrower is unreliable and it’s unlikely the lender would ever see their money back again so they simply don’t give it out. Who can blame them? Many lenders are privately funded with some actually lending their own money so it’s absolutely right that they only lend to those who can prove they can pay it back on time.
If you are looking for a no credit check payday loan now, stop. They do not exist, there is not a lender in the country that offers this service, regardless of what you may have seen in search results or adverts it’s simply not true.
If you do have bad credit, all is not lost. Depending on just how bad your credit is there are a lot of lenders out there still lending to those with less than perfect credit. If you do have severely bad credit then a payday or short term loan would likely only make your situation worse and lenders will be more reluctant to fund a loan.
You can use our Eligibility Test to find lenders that may accept you – it’s a unique tool that matches your answers to lenders answers, there’s no credit search involved and it may give you the answers that you’re looking for.
If you do have a particularly bad credit rating and have already been declined by multiple lenders, stop applying now as you will only be doing more damage to your credit record. Multiple searches from payday lenders would instantly tell a lender that you’re applying for several loans at the same time and that you have either been declined by them or you are over committing on your borrowing.
For information about your credit record, why not take a look at Noddle – it’s completely free to use and see your credit score and they can help you repair your credit score with useful tips.