Companies Offering Loans to Buyers with Bad Credit
In a situation like this, you might be tempted by ads and websites that guarantee loans or credit cards, regardless of your credit history. Be careful with companies that say things like: Bad credit? No problem or We don’t care about your past. You deserve a loan or Get approved now.
A lender who doesn’t care about your credit record or your bad credit score should give you a serious cause for concern. Legitimate lenders evaluate creditworthiness and confirm the information in an application before they guarantee you anything. Being pre-approved just means that you will pay a higher cost for your loan or, in worst case, will be the victim of a scam.
If a website asks you for an up-front fee for processing your pre-approved loan or credit, you should see a big red warning flag. Legitimate lenders disclose their fees clearly and prominently. Further more, they take the fees from the amount you borrow. Meaning, the fee is paid after the loan is approved.
An even bigger red flag is a lender who asks you to wire money or pay an individual. In such a case, just walk away.
If a company or person tells you that they will refinance an old loan and advises you to stop paying your current lender and pay them instead, say no. This is a scam. You should never send a payment to anyone other than your current lender. If you for some reason have trouble making your monthly payment, contact your lender instead.
How to Check Your Lender
If you still think your lender is serious, do this: get a company’s phone number from the phone and call to check they are who they say they are. Don’t let them call you. Get a physical address and check if it exists. You should also check if the lender is registered in your state. Lenders and loan brokers are required to register in the states where they do business. Never do business with a lender that is not registered.
If you think you’ve had an experience with an advance-fee loan scam, report it to the Federal Trade Commission.
Source: Federal Trade Commission