Can I Get a Secured Loan No Credit Check?

Can I get a secured loan with no credit check? Many people with poor credit history want to know their loan options and if their credit score will be assessed when applying. Do all secured loan applications include a credit check?

What is a secured loan?

Secured loans are loans that ask the borrower to use one of their assets as collateral within the loan agreement, most often a property, home equity or a vehicle, but can also be something more niche, such as fine art.

What happens if I don’t keep up with secured loan repayments?

The asset used as collateral can be claimed and sold by the lender if the loan isn’t repaid. The lender is unlikely to sell your asset if you miss a payment, but if you miss multiple payments, get into arrears or simply stop repaying, they may do this, meaning you could lose your home if that is the asset you secured against the loan.

Your credit score will also be affected negatively if this happens.

Aside from this difference, the loan works in much of the same way as other loans. The borrower receives a lump sum and pays this plus interest back through monthly repayments. There may be some variations of secured loans, such as a HELOC, which work a little differently.

Additional fees with a secured loan

It’s important when applying for a loan that you consider any additional fees which might apply as part of the loan, such as application fees, appraisal fees, early repayment fees, and late payment fees.

Do you need a credit check for a secured loan?

Yes, lenders will look at your credit history and your credit score when deciding on a secured loan application. They look at your credit score to help them determine if you’re unlikely to repay based on how you’ve handled your finances in the past.

Your credit score is a measurable assessment of your financial history. The number increases when you pay debts and bills on time, and it decreases when you don’t.

However, your credit score won’t be the only factor considered as part of the secured loan application. Lenders will also look at your income, existing debts and the asset being used as collateral when assessing the application.

Can you get a secured loan with no credit check?

It’s almost impossible to get approved for a secured loan without having your credit history assessed.

This forum user on MoneySavingExpert is hoping that it is possible to get a secured loan without a credit check as they are worried that multiple credit checks will negatively impact their credit score. This could potentially be the case, as multiple loan applications in a short space of time can have an effect.

There might be one type of secured loan you could get without a credit check. Stay tuned until the end of this guide for the details. 

Can I get a secured loan with no credit rating?

Unless you’ve just migrated to the UK, it’s very unlikely that you will have no credit rating. Everyone in the UK who has paid bills, rented an apartment, or taken out credit will have some credit history.

If you have recently migrated to the UK or recently moved back after being away for many years, you may struggle to get a secured loan due to the lack of information available to the lender.

In these cases, you’ll have to wait until you have a credit history before applying. 

What credit score is needed for a secured loan?

There is no certain credit score that will get your secured loan approved. Neither is there a certain credit score that will get your application rejected. Each lender has the right to apply its own lending criteria regarding credit scores. 

Can you get secured loans with bad credit?

Yes, it’s possible for applicants with a bad credit score to get approved for a secured loan. There are even lenders who specialise in providing loans for people with a poor credit history. 

When you do get approved for a secured loan with bad credit, you might be offered a higher interest rate than the representative example that was advertised by the lender.

Is it easier to get a secured loan or an unsecured loan with bad credit?

It’s generally considered easier to get a secured loan with bad credit compared to trying to get approved for an unsecured loan with bad credit. The lender faces less risk by lending to someone with a poor credit history when an asset is being used as security in the credit agreements.

In other words, the lender can get their money back much more easily by forcing the sale of the asset listed as collateral, compared with the process they would have to follow if you defaulted on an unsecured loan or credit card.

Improving your credit score before applying for a loan

It can be a good idea to try and improve your credit score as much as you can before you apply for a loan. You could do this by making sure you pay bills on time, maintaining a healthy debt-to-credit ratio, and avoiding frequent credit applications.

Can I get a secured loan against my house with bad credit?

It’s certainly possible to get a secured loan with bad credit when you use a property or home equity as collateral within the agreement. 

Properties and home equity are the most common assets used as security within these agreements, and because they are so valuable, they usually help people with a poor credit score to get the secured loan they need.

What loans do not do a credit check?

There is no such thing as a no credit check loan from a bank or online lender. 

How to get a secured loan with no credit check

There might be one type of secured loan which doesn’t include a credit check. These secured loans are from the high street, and they’re called pawnbroker loans.

A pawnbroker shop may offer you a secured loan without completing a credit check. However, they usually keep possession of the asset you’re using to secure the loan until all repayments have been made. If all repayments are not made, they get to sell the asset to recover the money.

How does a pawnbroker loan work?

You might take some jewellery to the pawnbroker shop for a £600 loan. The staff member gets you to sign a loan agreement, agreeing to a rate of interest and set monthly payments for one year. The shop will keep hold of the jewellery items until the full loan has been repaid, and if it doesn’t, they will sell the jewellery to the public.

Not all pawnbroker loans work like this. But, they do provide the lender with even more security because they retain possession of the asset during the repayment period.

Alternatives to a secured loan

It might be worth consideringother credit optionsto see if they might be more suitable for you, especially if you have a poor credit rating. These could includecredit unions,credit builder cards, guarantor loans, orPeer-to-Peer lending. In my experience, all of these options come with risks, so it’s important you research thoroughly.

Does a secured loan require a credit check? (Quick recap!)

Yes, the vast majority of secured loans require a credit history search. However, secured loans can still be approved with a bad credit history, although you might have to pay a higher rate of interest.

Pawnbroker loans are the only type of secured loan which may not complete a credit check on you. But your assets will remain in their possession during repayment. Not all pawnbroker loans work like this.