Be Able to Identify Bad Credit Loan Scams

For those who have below average credit, there are people out to get you. Unscrupulous scammers are aware that people with bad credit often need to have loans and use the opportunity to extract both money and personal information.

How can these kinds of scams work and how can you avoid them? Let's take a look.

==> How a Bad Credit Loan Scam Works

The scammer first makes contact with you via email, phone or by using a website.

Often they have some sort of promise where they promise that you will be approved for a loan, no matter what your credit looks like. (That should be your first red flag - no real loan provider guarantees loans without seeing your credit.)

They're going to then ask for your personal information, including social security, address, birth dates and account numbers, in order to process your loan.

Lastly, they're going to usually request an "advance fee" which must be paid so as to process your loan.

Obviously, once the fee is paid, no real money is ever wired to your account. The fee is forfeit, but the scam does not end there.

Your personal information is often then sold to third parties, who in return use your information to write bad checks, open unauthorized credit card accounts or commit all kinds of other fraudulent activities.

In other words, falling for one of these scams will not only cost you money, but possibly result in a stolen identity.

==> How to Recognize and Avoid These Scams

The first step to spotting a scammer is to always, always, always investigate the lender before giving any personal information.

Use the Better Business Bureau's website to look up any business you're looking at. If you see any scam reports, stay away from it. Also look them up on RipoffReport.

Never pay upfront for a loan of any sort. That applies for personal loans, bad credit loans and payday loans. In the USA and in Canada, it's outlawed for lenders to ask for a fee upfront, so if they do you know you're dealing with a scammer.

Finally, only work with websites you trust and know. Never do business with a company you haven't heard of, especially if they reached out to you first via email. Real loan companies will never, ever send out unsolicited emails.

With just a bit of background information and a careful mentality, you can avoid being scammed. It's unfortunate that there are people out there preying on people just when they can least afford the financial hit, but such scams all too common.

You now know how these scammers work, as well as a few tell-tale signs that will permit you to spot these scams miles away.

Learn more What Is Credit Score here