It’s not uncommon for people to accidentally make a few financial missteps in life. Doing so can often manifest in either a short credit history, or a low credit score – both of which are considered examples of ‘bad credit’ in the world of loans.
If you’ve found yourself in this position and are now looking to apply for a bad credit loan, it can help to know what to look out for. Avoid walking into a scam by remaining wary of the following red flags that can come with financiers dealing in bad credit loans.
The financier extends an offer without viewing your payment history.
Genuine lenders who are experienced in their business will need to see your income, credit report and other financial information before guaranteeing a loan. Doing so ensures your best interests are at heart in terms of how much you can borrow, and your ability to make repayments over time.
If a lender does not engage in this practice, or indicates some form of guarantee for your application without actually viewing your credit history, it’s a good idea to start looking elsewhere, lest you find yourself lured into an even stickier financial situation.
The financier is not state-registered.
As required by the ACCC, all lenders must be registered in the state that they practise in. When researching potential financiers, be sure to check that they are registered in your particular state by either checking their website credentials, Googling their business, or simply asking the lender directly.
The business’s website is unsecure.
This can be checked via a few different ways. Firstly, make sure the website begins with ‘https://’. That little ‘s’ indicates the site is secure. Secondly, look out for a padlock symbol whenever you are required to enter personal information.
Both of these little practices can help you to avoid handing out crucial information that may be mishandled later down the track.
Upfront prepayments are required.
This is a major sign that the business is not legitimate. Any financier that requests you to make prepayments in the form of cash or a debit card should send alarm bells ringing that the company lacks reputability.
Of course, this isn’t to say that no additional fees will be required – application, origination, appraisal fees and other common loan charges are all standard practice; however, such fees are generally taken from the total loan amount rather than requested upfront
Dodgy advertising practices are used.
Things like cold calls, door-to-door solicitation, and even the act of pressuring you to take action rather than giving you time to review the offer are all considered illegitimate advertising methods in financing. Any company that engages in such is likely to be after your money rather than committed to investing themselves in your situation.
By taking a few extra precautions and doing your research, you can save yourself a lot of stress when it comes to applying for a bad credit personal finance.