A hand holding up a smartphone, with a credit score scale on the screen. A hand holding up a smartphone, with a credit score scale on the screen.
A hand holding up a smartphone, with a credit score scale on the screen.

As awareness on credit scores and the impact they can have on loan eligibility increases, the demand for “no credit check loans” has skyrocketed. Let’s break down what a credit check is, and disassemble the promotion of a “no credit check loan”.

A young female sitting on a sofa surrounded by credit score scales.

What is a credit check?

Some Banks, lenders and utility providers check your finance and utility account record over time before offering you one of their products or services. They complete these checks to understand your ability to pay accounts on time, and to make a judgement on whether you’re eligible to be one of their customers. In most cases, when they conduct a search on your credit file, it will log their search, which is called a credit enquiry (also known as a credit check). According to several credit reporting agencies, credit enquiries can affect your score by reducing between five to ten points at a time. This means if several enquiries are made in a short period of time, a credit score can drop significantly, changing the bracket from excellent, to good, to average, or poor in a matter of hours.

How can I prevent a credit file enquiry?

Typically, most credit enquiries are made by an individual applying for finance, or opening a utility account (phone, internet or electricity services). In a finance scenario, if someone is applying for a loan online, they will conduct their research by clicking “apply now”, or “how much can I borrow?”. This click of a button can action the credit enquiry process explained above. To prevent having an enquiry land on your file, it is best to avoid providing your personal information and proceeding with pressing any buttons online. If applying over the phone or in person, avoid allowing a company to check your credit file without your consent. This practice is in-fact illegal, and a breach of the privacy act. Under no circumstances should an institution access your personal information without prior consent from an individual.Ume Loans is clear in their application process, and will communicate when you get to the point that a credit enquiry will be conducted. We offer a non-credit affecting application process, meaning your credit score will not be impacted immediately at the time you express interest in obtaining a loan with us. We will only proceed with a credit enquiry further into the loan assessment and approval process.

It is almost unavoidable in the present day to obtain a loan without having an enquiry land on your credit file, but being aware of when it is going to happen is integral to protecting your financial footprint. Our team of Lending Specialists are experts in second-chance loans, and know the importance of maintaining your credit score. For this reason, we offer bad credit car loans and other lower credit facilities to people who may have been turned away by other institutions. We understand that not everybody knows how their credit can be affected, and will base our assessment on the merit of your profile, as opposed to any incidences in the past.

Does a “no credit check” loan affect my credit file?

The messaging behind a “no credit check loan” can be deceiving for those who are not familiar with finance jargon. Often, people who are aware they may have impaired credit search for “no credit check loans” or “no credit check finance” with the intention to safeguard their credit score. Typically speaking, lenders and financiers that advertise these types of products often fall into the category of “bad credit personal loans” or “payday loans”. A payday loan, also known as a small amount credit contract, is a loan often under $2000 with a high interest rate attached to it, that is to be paid back over a shorter amount of time compared to larger traditional loans. Bad credit personal loan lenders typically do not require a credit enquiry to be able to offer you a facility, however if you are approved, this will still list on your file. The line between an advertised “no credit check loan” and the practices that typically take place with these facilities can become blurred when it comes to consumers. In essence, a credit enquiry is almost always conducted at some point throughout the process of a person obtaining a loan.

If you are aware that you may have impaired credit, and would like to enquire about a bad credit car loan, or a bad credit personal loan, consider Ume Loans as your first port of call. We have helped thousands of good people obtain the finance they are in need of, with the intention to improve their financial profile for the future.

Give us a call today on (07) 5443 3863, or apply online and complete our secure, obligation free application form.