Avoid Loan Scams and Protect your Credit Report

Loan scams can cause all kinds of problems, including the placement of your credit report into the wrong hands. However, it is much more than that as it involves taking money from you in advance for what you think is advance approval for a loan.

Nature of this Scam

A loan scam often works in this way: You are promised advanced approval of a loan or credit card. However, in order to take advantage of this ‘offer’ which really is not an offer you need to pay a certain fee in advance.

Signs of an Advanced-Fee Loan Scam

It may not be obvious that you are dealing with an advanced-fee loan scam right away. However, when you look a bit closer there are sure ways you can spot a possible fraud:

• If a lender does not care about your credit history and does not even look at your credit report you can be suspicious. There are such things as ‘bad credit loans’ and credit cards for people with bad credit. However, you usually do not have to pay up front for these cards.
• The feeds you are charged are not disclosed until after signup. You also may be given reasons or excuses that the fees exist such as it’s for “insurance,” processing,” or “paperwork.”
• You are offered a loan over the phone. However, you are asked to pay a fee before the supposed lender can deliver. It is illegal to operate this way in the U.S.
• You try to verify a phone number or contact of a supposed existing business. However, you find none. This is a sure sign of a scam.
• If a certain lender is not registered in your state that can be an issue. If you want to find out if they are you can call your local Attorney General’s Office to find out. You could also call the Department of Banking or Financial Regulation to find out.

Additional Advice

One other concern is that just because you see a television ad or hear an ad on a radio that sounds legitimate do not always assume it is. Even crooks and con artists can afford to put these promotions on the air. Acting as legitimate as possible is how con artists get you.

Furthermore, by all means never deal with agencies who expect you to wire money in order to pay a fee for one of those advanced-approval loans. This could hurt you and these frauds may even at some point show up on your credit report.