If you receive a message that states, "Bad credit? No credit history? Sign up with our bank NOW and have access to fast cash," it's most likely a scam.
Some warnings of a credit card or loan scam include:
- A lender who isn’t interested in your credit history. A lender who doesn’t care about your credit record should be a red flag. Ads that say “Get money fast,” or “No hassle — guaranteed,” often indicate a scam or at least, questionable practices. Banks and other legitimate lenders generally evaluate a borrower’s financial background and verify your application information before they guarantee credit — even to creditworthy consumers.
- Upfront fees, or fees that are not disclosed clearly or prominently. Scammers may say you’ve been approved for a loan, then demand a fee before you can get the money. This is a cue to walk away, especially if you’re told it’s for “insurance,” “processing,” or “paperwork.” While legitimate lenders often charge application, appraisal, or credit report fees, they disclose their fees clearly and tell you upfront. They take their fees from the amount you borrow, not from your wallet ahead of time. Legitimate fees usually are paid only after the loan is approved.
- A loan that is offered by phone. It is illegal for companies doing business in the U.S. by phone to promise you a loan and ask you to pay for it before they deliver.
- A lender who uses a copycat name. Scammers use similar names to well-known or respected organizations and create copycat websites. Always get a company’s phone number on their official directory assistance, and call to check they are who they say they are. Get a physical address, too: a company that advertises a PO Box as its only address is one to be wary of.
- A lender not registered in Connecticut. Lenders and loan brokers doing business in Connecticut are required to register here with the Department of Banking. Checking registration does not guarantee that you will be happy with a lender, but it helps eliminate scammers.
- A lender that asks you to wire money or pay an individual. Don’t use a wire transfer service or send money orders for a loan. You have little recourse if there’s a problem with a wire transaction, and legitimate lenders don’t pressure their customers to wire funds.
Just because you’ve received a slick promotion or an ad, don’t assume it’s a good deal — or even legitimate. It’s important to check out any potential lenders with the Department of Banking.