How to Stop Bad Credit Loan Scam?

Last Update: February 10, 2021 Loans Scams

Bad credit loan scams are among some of the fastest-growing scams. They are really taking advantage of people who are already in a vulnerable position just because of their low credit score. These loans are “guaranteed” no matter what and without peering into the borrower’s credit history. However, they also require the client to pay a “security deposit” upfront before they get the loan. The problem with this is, the company has no intentions of disbursing the loan. They are just collecting security deposits, which means you lose your money.

You are Not Alone if You Fell for a Scam

Let’s get it clear right up front – you are not the only person who ever fell for a scam of any kind, let alone a bad credit loan scam. We know they exist because too many people have fallen victim already. Once scammers trapped you, you realize you are in an even bigger bind than you were before. Not only did you not get the loan you were counting on to help you out of a tight spot – you probably gave them the last of the money you had available, to begin with. Now you are stuck in an even tighter spot. And they don’t mind a bit! They got your money, and you got none. Wouldn’t you like to know how to identify a bad credit loan scam before you get caught in a trap like this one? Read on – there are some very obvious signs that a company is not legit.

Spotting Bad Credit Loan Scam Companies

Sometimes it’s pretty difficult to identify a scam company. They try really hard to look like a legitimate lender, and sometimes they are really good at that. But there are a few identifying features that will let you know they are not dealing with you on the up and up. Here are a few:

  • Blind Guarantees. A legitimate lender will not tell you they don’t need any information from you. A bad loan scam promises to lend you money without knowing your credit score, income level, and any other personal information. A lender that guarantees you that you qualify for a loan without asking you to apply or even looking at your financial information is probably not legit.
  • Upfront Fees. Lenders who ask you to pay fees upfront before they ever give you the loan are not legit. This is one of the most obvious signs of a scam loan company. It is illegal for a company to ask for an upfront payment before giving you a loan. They may call it by other names like a security deposit, premium, collateral payment, or insurance. But if they ask you to make an upfront payment to get your loan, they are engaging in illegal practices and cannot be trusted.
  • Unsolicited Contact. Beware of a company that inundates you with calls or mailings to extend you a loan. They may advertise reasonably, so you know they are there – but they should not be sending you tons of emails, postal mailings, or phone calls to try and get you to take out one of their loans.
  • Funky Sounding Company Names. Some scam companies try to make up names that sound a lot like those of legitimate lenders. Their goal is to confuse consumers into thinking they are the legitimate version of the name. Make sure you have chosen the right company – the reputable one – before taking out a loan.
  • Just Too Pushy. After you are sure the loan company is legit, you can provide them with your personal information if you feel safe. Be really careful about giving your information out over the phone, mostly if you were not the one who initiated the call. Scammers can be very pushy, so be leery of them.
  • Use of Scare Tactics. Wise people are going to shop around for the best deal when looking for a bad credit loan. A legit lender will not try to get you to take out a loan before you’ve had a chance to consider your options and think about it. A good rule of thumb is if they want you to do the loan “now or nothing,” – nothing is better. You should never feel trapped into taking a loan, and if you do – they are most likely not honest.

Rules to Live By

Other than being able to readily identify a scam lender by the questionable strategies they use, there are two rules that you should live by. If you know how to identify a scam lender and follow these two simple rules, you should be fine when taking out your bad credit loan.

  • Rule Number 1

Research, Research! Always do your research on a company. Just type their name into a search engine to get quick and easy information about them. If you want to, type their name and “scam,” and you may see some things you were not expecting. If they are a local business, you can visit their office and check with the Better Business Bureau to see their BBB rating. This can tell you a lot about a company’s legitimacy.

  • Rule Number 2

Verify, Verify! Again you can check with the BBB to see how they rank the company, and secondly, try cold calling them. What we mean is this. Get their number from directory assistance or a phone book (if you still own one), then call them to see if you’re dealing with the company you thought you were.

Keeping Yourself Safe

Let us reiterate that there are many ways to check up on companies to ensure you are dealing with a legitimate lender. It doesn’t take too long to look at a few reviews of the company and view their BBB profile. (Beware if they don’t have a BBB profile!) Remember that they really shouldn’t have all glowing reviews, nor should they have all negative reviews. A legit company will likely have lots of positive comments by consumers and be sprinkled with one or two negative comments along the way. By being very proactive before you run out to get a bad credit loan, you can save yourself some real trouble.



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