How to Spot Bad Credit Loan Scams

When you have bad credit, it can be difficult, if not impossible, to secure loans from traditional financial institutions. And that can make it harder to determine whether an available bad credit provider is legitimate or a scam.
However, there are some signs that can help you spot bad credit loan scams before applying.

To help you get started, here are some warning signs that may identify loan scams before you provide them with your information.

They Charge You to Apply
Most reputable lenders will not charge you for the privilege of being considered for a loan. Instead, they will accept your application and process it for free. Then, if any charges are due related to administering the loans, those are only assessed if you choose to go forward with securing the funds.

No matter what the upfront charges are supposedly for, being asked for money before you have actually secured a loan is automatically a sign of a scam in progress. This includes funds for “insurance,” initial repayments, or taxes. In these cases, it is better to simply walk away. Otherwise, you may simply lose the upfront funds and possibly put yourself at risk for additional losses or even identity theft.

 
Loan Guarantees
There are many examples of guaranteed loans, which should be a red flag, especially if you have poor credit. Any provider that provides guarantees coupled with any of the other points listed here should be carefully watched.

They Use a Non-Business Email Address
Lenders that communicate with you via email will have email addresses that directly connect to their business. They will not use generic email addresses for any purpose. So, if you see a message about a loan and it is sent from a Gmail, Outlook, Yahoo, or another account that is open to the public, it is best to assume you are talking with a scammer and not a reputable lender.

They Offer More Money
Reputable lenders will not offer you more money than you asked for, regardless of whether you may qualify for additional funds. Any person who says you can secure additional funds after you have let them know how much you are interested in borrowing should be considered a potential scammer.

They Offer a Low-Interest Rate
If you have bad credit, you know that you will see higher interest rates than borrowers with a better credit history. That means, if a lender offers you a surprisingly low-interest rate, you need to proceed with extreme caution. Often, a low-interest rate proposal is a method for tricking borrowers with bad credit into continuing for fear of losing out on a “great deal.” However, the vast majority of these transactions will not pan out, and you will simply be giving the scammer access to personal information with which they can do you harm.

You Never Applied
If you receive a loan offer from a lender with which you are not familiar, you should not proceed with the loan. Offering individuals with poor credit a loan even when they didn’t ask for one is a method for getting you to divulge personal information. It could lead them to steal funds or your identity, and should always be considered a red flag.

Getting a loan is a serious financial transaction, and you should never go forward if you have any reason to be suspicious. If you think you may have been a victim of a loan scam, make sure to report the scam to the appropriate government office and file a police report at your local police station.

 
How to Prevent a Scam
If you are in serious financial stress, you may be more vulnerable to being scammed. While the promise of money may sound appealing, you need to protect yourself and your personal information. Try these simple points to call out scam artists.

– Ask and check there Australian Credit Licence (ACL)
– Ask them where they are based and their address
– Check if the website is secure (https), there are lots of fake sites out there.
– Go with your gut, if every other lender has knocked you back and lender is promising you the world – chances are, it’s not genuine.

For those dealing with serious financial issues and need a loan, there are numerous options available to help regardless of credit history. Review some of the below links.

– Help paying bills
– Cash advance for Centrelink recipients
– Help paying rent

Get state or territory specific financial help across most living needs by visiting our home page and clicking on your region.