Important: Koyo loans are no longer lending. This page has been preserved for historical purposes, and you can compare a range of personal loans here.
What is Koyo?
Koyo claimed to be the UK’s first Open Banking-based online consumer lender. It targeted borrowers with little to no credit history who are looking to take out a loan.
As of July 2023, Koyo stopped lending. If you’re an existing customer, your loan is now being managed by Capquest.
How does Koyo work?
Most lenders require that you have good credit history before they’ll approve you for a personal loan, which means it can be difficult to get finance if you’ve never had a chance to build your credit score. This may be because you’ve just moved to the UK, or because you’re still young and have never taken out a credit product before.
Koyo aimed to provide personal loans to those with limited credit history, but without the high fees and interest often charged by other traditional lenders. To do this, Koyo considered more than just your credit file – focusing instead on your banking transactions to check affordability.
Why does Koyo ask for access to my bank account?
When you apply for a personal loan with Koyo, you’ll need to log into your internet banking and allow Koyo to view your transactional data. This is becoming more common practice, and it’s known as Open Banking. Koyo uses a popular third party provider called TrueLayer.
Koyo uses this data to determine how affordable a loan would be for you, taking into account your income and outgoings. While most lenders only use a credit check (plus the information you’ve given in your application) to determine your risk as a borrower, Koyo will also use your Open Banking data. The theory is that this additional information can help them to approve applicants that would otherwise get rejected.
Does Koyo run credit checks?
Yes. Koyo can run a “soft” search of your credit file, in conjunction with analysis of your banking transactions, to tell you whether or not your application would be successful. This doesn’t impact your credit score.
If it’s good news, and you decide to go ahead and apply for a Koyo loan, Koyo will run a “hard” credit search at that point. These have a small, usually short-lived, negative impact on your credit score – so you don’t want to do too many of these in a short space of time. In fact, you should only allow a hard credit search when you’re fairly confident you’re going to get approved. That’s why almost all lenders (including Koyo) let you check your eligibility beforehand.
Koyo isn’t looking for decades of responsible use of mortgages/cards/loans etc. in your credit record, however – in fact it specialises in catering to those with limited credit histories. Bad credit (primarily missing loan or card repayments) and CCJs are deal-breakers for Koyo, but a thin credit file isn’t.
What is Open Banking?
Open Banking is the name given to changes to the financial services industry that makes it easier for you to share your banking and financial data with UK banks and providers. This includes your everyday spending and saving. Open Banking aims to improve competition and innovation in the banking sector, and help you get a better deal on financial products.
Is Koyo right for me?
Koyo offers personal loans for those who don’t have a detailed credit history. This may include:
- People who are new to the UK
- Students or young people
- Customers with no credit history
You’ll need to be over 21 and have lived in the UK for at least six months. You must not have a history of bad credit or county court judgements (CCJs) and you must not be bankrupt.
Is Koyo legit?
Koyo is a trading name of Betr Technology Ltd., which is authorised and regulated by the Financial Conduct Authority (FCA).
To gain read-only visibility of your banking transaction data (if you give it permission to do so), Koyo works with a third party provider called TrueLayer, which is also authorised and regulated by the FCA, and is used by several UK lenders. TrueLayer is also a regulated Open Banking provider. Using this open banking connection, Koyo can analyse transactions, but does not have the power to action transactions.
Pros and cons
- Available to those with no UK credit history.
- Uses Open Banking to determine borrowing level.
- 100% online.
- No fees.
- Fixed rates – so you can budget with confidence.
- You must have lived in the UK for 6 months to apply.
- You’ll need to authorise Koyo to view your banking history in order to apply, which is safe but adds an extra step into the process.
- No repayment holiday option.
Koyo customer reviews
Koyo has received extremely positive reviews from customers according to review platform TrustPilot. It currently has an “excellent” TrustPilot rating, with a score of 4.9 out of 5, based on more than 1,200 reviews (updated April 2023).
Many customers cited great customer service and efficient application process as a reason for their positive review, but some suggested they were unfairly rejected for a loan.
Is Koyo any good?
Koyo uses smart open banking tech to offer competitive pricing to a niche audience that’s been largely overlooked in the past.
If you’ve previously used credit products in the UK, and have built up a good credit record, then chances are you’ll get a better deal with more mainstream lenders. And similarly, if you have a damaged credit file, then other specialist lenders are more likely to be able to help you.
But for those with little to no evidence of credit use in the UK, who are being responsible with their finances and can afford to take on a loan. Koyo is a sensible bet.
What are my other options?
If you have little to no credit history, it’s very, very tricky to be approved for a personal loan with a bank or other traditional lender. You could consider a short-term loan, though this is the most expensive form of borrowing and should only be used as a last resort.
If you’re looking to build your credit history, you may want to consider the following:
- Loqbox. Loqbox offers a unique financial product that lets you make regular direct debit payments into an account, but treats them like loan repayments. This means that each deposit helps build your credit score, which then means you may be more likely to be approved for a regular personal loan in future.
- Credit builder credit card. This is a specific type of credit card that is designed to help customers build or improve their credit score. By showing that you can manage and repay a credit account, you can prove to other lenders that you’re suitable for a loan.
Frequently asked questions
Will you be approved?
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