A. Customers should do the due diligence of prospective lenders before applying for a loan. Just as lenders must know their customers before advancing a loan, borrowers should take the effort of checking the credentials of lenders to avoid being defrauded and ensure the company has the authority to lend the money. This can be done by simply checking the registration status of the lender on the Financial Conduct Authority register and Company House register. All legal lenders must display their company identification number and details of the certificate of registration.
While digital innovation has made it possible for lenders to offer loans speedily, lenders that use such high-pressure tactics could be up to no good. It may be a ploy to get people to make a rash decision without having time to do research to uncover the scam they’re running. Check if the service is legitimate, don’t fall for the urgency plea.
There should be no pressure on applicants to act immediately, nor should there be any promise of guaranteed loan approvals without due diligence of an applicant’s creditworthiness. Reputable lenders make it clear that they need to look at your credit report (Equifax, TransUnion and Experian) as they need to ensure the financial history is in line with their risk appetite. When bad credit is considered, details about income, employment and expenditure will be considered when determining your eligibility.
Fraudsters have been known to require prepaid debit cards, gift cards or banking information from borrowers. Generally, the scammers claim they need the information for insurance, collateral or fees. Legitimate financial institutions may charge a fee for your application, appraisal or credit report, but they should offer you the option to add those charges to your loan, not require you to pay them upfront.
Some scammers go to great lengths to steal from consumers, including using a legitimate lender’s name. It’s also not uncommon for scammers to swap out the name and number that shows on your caller ID to trick you into believing they’re the real deal. You can protect yourself by ignoring solicitations and contacting the lender directly via their secured website or by calling the online customer service number. If the lender has no record of reaching out to you, that’s your confirmation that you were dealing with a fraudster.
Customers can also obtain additional information on the FCA’s website on the dangers of Loan Fee Fraud by clicking here.