Identity Theft

Protect Yourself from Bad Credit Loan Scams

Comments 4 Comments

A consumer recently posted this story on the forums, detailing her near-miss with a “bad credit loan” offer:

I was contacted about being approved for a $65,000 loan which I was receiving from “private lenders” because the banks turned me down. Because I’m high risk, I need to give the first 3 months up front. He really pushes the wire transfer (for the first three payments)…

After I got home, I saw the news letter about loan scams and knew that this was one…

I have not given this thief any money and thank for the heads up and research tools.

This is one of the positive stories we’ve heard from people who have avoided advance fee loan scams. Others are not so lucky. We’ve heard after the fact from consumers who lost hundreds, or thousands of dollars, to these low-life “lenders” who will steal the very last dime of desperate borrowers.

Before you give money to an Internet lender who promises to give you a loan regardless of your credit rating, please come to the forums and read the real-life stories!

The FTC also offers some tips for avoiding advance fee loan scams. Here’s a brief summary. Tip offs that may be dealing with a scamster:

  • A lender who isn’t interested in your credit history. Banks and other legitimate lenders generally evaluate creditworthiness and confirm the information in an application before they guarantee firm offers of credit — even to creditworthy consumers.
  • Fees that are not disclosed clearly or prominently. Unless you are dealing with a reputable, secured credit card issuer, an upfront fee that the lender wants to collect before granting the loan can be a cue to walk away, especially if you’re told it’s for “insurance,” “processing,” or just “paperwork.”
  • A loan that is offered by phone. It is illegal for companies doing business in the U.S. by phone to promise you a loan and ask you to pay for it before they deliver.
  • A lender who is not registered in your state. Lenders and loan brokers are required to register in the states where they do business. To check registration, call your state Attorney General’s office or your state’s Department of Banking or Financial Regulation.
  • A lender who asks you to wire money or pay an individual. Don’t use a wire transfer service or send money orders for a loan!

I’ll add another tip: Check out the domain name registration for the company. You’ll often find the website is registered overseas, anonymously, or has recently been established. If so, investigate carefully.

Please be careful. I’d like to hear your success story about how you avoided a rip-off, rather than read about how you’ve been taken.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

  • Pat

    Gerri – Great article. Crucial information for everyone, particularly homeowner as these credit loan scammers target mortgage-holders. Look forward to reading more posts!

  • S McKay

    Thanks Gerri! I actually just recieved one of these (to good to be true) offers in the mail about being approved for a loan if I can come up with 2K down. After investigating the company I had discovered that they were based overseas. Unfortunately there are probably still many people that get suckerred into these kinds of shady deals.

  • Jim


    I went on line to apply for a loan and my credit is less than perfect. I filled out only basic information and a representative from Applestone called me and said they had a loan but I would need a $1000.00 security deposit. They also wanted me to wire it to them. It sounded suspicious and after they faxed the paperwork I decided there is no way this is legit. I called to tell “my loan agent” that I was not interested and he began cursing at me and threatening to forge the paper work, ruin my credit, and take out loans in my name. At this point I am sure he realized I knew it was a scam and he lashed out, but people will fall for this and I am sure already have.

    The guys name is William Henderson. The temporary number is 877-864-3666 extension 504
    The fax came from 202-34 Elmwood Ave.
    Burlington, VT

    Just wanted to report this and hope you guys can help shut these scam artists down.

  • Gerri Detweiler


    I am so glad you didn’t fall for this! Be sure to also report it to


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