Some bad credit loans really are too good to be true. To avoid being scammed by a shady lender, be on the lookout for the signs below.
The lender demands you pay fees up front.
A legitimate lending institution won’t ask for payment before you’ve been approved and receive your loan. While some trustworthy lenders may require that you pay an application fee or a credit report fee, these are typically taken out of the loan you borrowed.
The lender requires that you act immediately.
If a lender is pressuring you to make a decision within a small window of time, that may be a red flag. A proper lender won’t corner you and understands that the decision to take out a loan may require some time to think over.
The lender has no physical address.
A reputable lender will have the company’s physical address listed on its website (not a post office box), and you’ll be able to confirm it by using Google Maps or a similar app.
The lender is not registered in your state.
A lender must be registered in your state before it can do business, according to the Federal Trade Commission (FTC). Lenders should note which states they are or aren’t registered with. If you’re suspicious of a scam, you can reach out to your state attorney general’s office to find out if that lender is registered where you live.
The lender contacts you first.
If a lender contacts you but you haven’t applied or completed a form with them before, it’s safer not to respond. It could be a scam to steal your financial information. Legitimate lenders won’t cold call and ask for your personal details.
The lender doesn’t have a secure website.
Some scammers may attempt to steal your information through their website. When researching bad credit loans, be sure to check that a website’s URL has the letter “s” following “http,” as well as a padlock icon on pages that ask you for your financial information.
The lender doesn’t check your payment history.
A reputable lender won’t guarantee your approval for a loan. Legitimate lending institutions will first want to see your payment history, your credit and DTI ratio and other financial information.
What to do if you’ve been scammed
If you find out you’ve been scammed, the first step is to contact law enforcement and file a police report. Unfortunately, there may not be much they can do, but you’ll want to document the crime as much as possible.
Once you’ve filed a police report, you should also report the scam to the FTC Internet Crime Complaint Center. By reporting it, you could potentially prevent others from being scammed in the future.