How To Identify Loan Scams and Fraudsters

When you’re in need of money and have a poor credit score, it’s important to be cautious about personal loan offers that might not be what they seem. There are scam artists out there waiting to take advantage of your situation.


In this article, we’ll discuss some warning signs that victims of loan scams often experience.

How to Identify Loan Scams and Fraudsters

If you’re worried about falling for a loan scam, here are some simple ways to tell if something fishy is going on:

  1. No Interest in Your Credit History: Legitimate lenders always check a person’s credit history before offering a loan. If you hear phrases like “Bad credit? No credit? No problem!” be cautious. A trustworthy lender always works with credit bureaus.
  2. Phone Offers: Making loan offers over the phone is illegal. Any offer should be in writing and clearly outline all associated fees.
  3. Upfront Fees: Be wary of lenders asking for upfront fees, even if they call them application or document fees. Think about it: sending money before receiving a loan is a clear sign of a scam. Legitimate lenders disclose their fees, which are usually included in the loan cost, not paid beforehand.
  4. Wire Transfers: If a lender insists on wire transfers for fees, it’s a red flag. Never wire money to an individual. Ask for the lender’s physical address and verify its legitimacy through the Attorney General or Financial Regulations office in your state.
  5. Copycat Name: Some scam artists create business names or websites that look genuine. Always double-check with the Better Business Bureau to confirm the address and phone number. If the address is a P.O. Box, exercise caution.
  6. Personal Information: Never give out sensitive information like your social security number, birth date, or bank account number unless you’re certain it’s a reputable lender. Scammers can misuse this information for identity theft or to access your bank account.
  7. State Registration: Lenders and loan brokers should be registered in the states where they operate. You can verify this through your state’s Attorney General’s office, Financial Regulation, or Department of Banking.
  8. Customer Service: Trustworthy lenders have reachable phone numbers. If you’re uncomfortable with their customer service, think twice about doing business with them. Avoid settling for automated responses; you should be able to speak with a real person.
  9. Reviews: Online reviews carry weight. Google the lender’s name and check platforms like Facebook or the Better Business Bureau for reviews. If you spot consistent negative feedback, take it as a warning.
  10. Red Flags: Watch out for emails with spelling, capitalization, punctuation, or grammar errors. These lack professionalism. Be cautious if a lender offers a free period with no payments for an extended time. And be very wary if they claim not to use credit checks and promise money regardless of past financial problems.


Loan scams are on the rise, with many falling victim. If you’ve been targeted by a loan scam or personal loan fraud, contact your local law enforcement immediately. Remember to stay vigilant and use these warning signs to protect yourself from potential scams. If you’re in need of a loan, consider using a platform that allows you to compare offers from different lenders. This will help you make the best decision for your situation.

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