How to Spot a No-Credit-Check Loan Scam
A Must-Read Guide On How To Avoid No-Credit-Check Loan Scams
The Federal Trade Commission (FTC) reports that Americans lose over $1 billion to fraud every year. The numbers in the United Kingdom, Australia and Canada are high, too. While fraud happens in many different ways, consumers at large need to be aware of the variety of loan scams going around. Let’s dive in and take a look.
Loan scams are quite common. They’re likely going to be even more common now, as many Americans are out of work and facing a cash crunch. If you need a loan, you want to make sure you’re getting a legitimate loan. Keep an eye out for these signs that the deal you’re about to sign is a no-credit-check loan scam.
The Lender Communicates by Phone or Writing
It would be best if you did your homework on anyone offering you a loan, whether it’s a no-credit-check loan or any other loan type. Lenders should have a physical address and a secure website. If you can only get an email address or PO box for them, you may be dealing with a scammer.
The same is true of lenders who only provide phone numbers, but no physical address. Lenders who only arrange to meet you at your door may also not be legitimate. A good rule of thumb is that you should be able to visit the lender in their office.
If the lender does have a website make sure it’s secure. Finally, you can always check that the lender is registered in your state. If they’re not, you should look elsewhere for a loan.
Loan Scams and Upfront Fees
Another typical loan scam alert is the lender asking for upfront fees. The lender may call these application fees, document fees, or something else. The result is the same: you pay before any service is rendered. Lenders will often ask for a prepaid credit card or a wire transfer to cover these costs. This is a huge red flag. The lender can receive these funds, then walk off with them.
If a lender asks for a wire transfer, contact the Attorney General in your state. Ask them to verify that you’re dealing with a legitimate business.
No-Credit Check Can Be a Red Flag
Some reputable lenders do offer legitimate no-credit-check loans. One type of bad credit loan is an income based loan. With this type of loan, the lender looks at your current income, not your credit score. If a lender shows no interest in your financial history, that could be a warning sign. Most lenders want to have a good idea of what your credit history looks like. This tells them how high-risk you are.
Scammers actually prefer people who are likely to fall behind on their payments. They can collect more in late fees and penalties. Always do your due diligence and look for reputable lenders. If someone claims they offer no-credit-check loans, take a good look to make sure they’re a legitimate business.
Being Aware Is Good Scam Prevention
A loan scam can have devastating impacts on its victims. By educating yourself and keeping an eye out for warning signs, you can stay safe.
Are you looking for more tips on spotting and avoiding scams? Check out our extensive library and discover how you can prevent all kinds of scams.
Loan Scams: How To Report Fraud
Let your family and friends about this mini guide on avoiding no-credit-check-loans by sharing this article on social media using the buttons provided. You can also officially report the scammers to the Federal Trade Commission using the link below:
How To Stay Safe
If you want to be the first to find out the most notorious scams every week, feel free to subscribe to the Scam Detector newsletter here. You’ll receive periodic emails – we promise not to spam. Meanwhile, educate yourself with some other fraud-related articles right under this paragraph, so that you can protect yourself in many other aspects and niches. Last but not least, use the Comments section below to expose other scammers.
Here are some must-reads for the end:
Bad Credit: Auto Loans Fraud