Spotting Bad Credit Loans Scam

Spotting Bad Credit Loans Scam

Nowadays, having a history of bad credit can harm potential borrowers, as these users will be looked with regard by lenders. Knowing this, a wide range of companies will detect this necessity of ‘being in a desperate need of money’. This is why it is very important to identify this kind of scams and protect you from fraudulent practices.  

A loan that is obtained either from a bank or lender for a short period of time is termed as Cash advance as in this when you want cash payment on an urgent basis you can be credited by lenders and you can meet expenses.

Here are some tips to follow to spot bad credit loans scam:

  • The potential lender may ask you for a fee before receiving the loan. This is call ‘advance’ or ‘upfront fees’. They will require from you a small percentage of your loan balance. Scammers will run away with your money and you won’t see the promised loan.
  • Many potential lenders should be at least interested in seeing your credit score. If they do not even ask about it, it is a bad sign. Not all credit checks are hard, but a smooth check should always take place.
  • Pay special attention to unsolicited loans offers. Check if you regularly receive any kind of loan offers via post or email, as this is a very common channel scammer use to attract their victims. They are capable of crafting similar messages to those from real companies. They may even try to reach you on the phone to show you a more ‘real appearance’. A truly personal loan business won’t contact you on any of these platforms. Also, these illegal tactics may be easy to spot within their messages, as they sometimes include links to fake websites or some grammar or spelling mistakes.    
  • Check out for unauthorised subsidiaries in a different country. Many scams come from an overseas firm; therefore make sure the lender you are applying to has a national address. Check out if the websites’ data from the potential scam has not been updated recently: this is a major scam sign that cannot be avoided. 
  • The lender asks for a prepaid credit card. They will assure you that they need it to cover some fees. Do not trust this: a legal financial institution will charge you a fee, but they will discount it from your loan.
  • Potentially insecure website. You should always look for two signs: a padlock (which means that they will require from your personal information); and an URL beginning with ‘http’ instead of ‘Https’ (which is the secure protocol). If you cannot see any of those two, just move on a different site. 

What should I do next? If you suspect that you have been targeted by a bad credit loan scam, the first step you should follow is to report it. 

Here is what you should do next:

  1. First of all, find out if your potential lender is legitimate. You will have to check the pertinent financial authority or consumers’ organization to study if your potential lender is legal.
  2. Keep a record of everything: you will need to provide documentation of what happened. These are emails, files, screenshots… you will show it to the competent authorities. 
  3. Call the appropriate law enforcement. Go straight away to your local police department, as they will be able to fill an official record. 
  4. Contact specialized agencies. Established consumers’ or financial organizations will put you in contact with other agencies. In the meantime, conduct relevant research to find out other agencies that may be open to help you. 

Although these warning signals from bad credit loan scam may be easy to identify, sometimes they can also fool you. There is nothing to worry about if you spot them and act on time. This experience will guide you in the future, allowing you to find reputable lenders securely. 

Some good options we advise to consider are:

  • Bad credit loans. These kinds of loans are quite flexible and may also help you to build on some good credit. They hold lots of benefits and are ideal for borrowers with poor credit history.
  • Secured loans from credit unions. These types of loans allow you to build up credit faster or to get cash on a lower rate.

Some other options we do not recommend to stick to:

  • Loan shark. Loans with high-interest rates far above any regulated rate. Sometimes, this type of lender will share threats in order to collect debts. They will also be open to lending high quantities of money in exchange for these high-interest rates, calling the debt to be repaid at any time.
  • Payday loans. This type of unsecured loan holds high-interest rates; they are kind of a ‘cash advance’. It is a short-time borrower that will be based on the borrowers’ income and credit profile. 

Although these two options are perfectly legal, we recommend finding out other more secure alternatives. Many of these lenders will target bad credit borrowers taking advantage of their situation.