Ways to detect loan frauds and protect yourself from red flags
Fraudsters are getting more erudite than ever before. Some are still engaging in older methods of burgling, but some are using the latest technology to pull out money from people through illegal means.
A loan fraud occurs differently in different scenarios. But in every case, it is capable of ruining your credit score. It can obstruct the process of obtaining a loan for purchasing a home, starting a business, buying a car, or other loaning needs.
Every individual needs to borrow money or apply for a loan at some point. Many arrange cash from fast loans in the UK with no guarantor, and some take other financing options suitable to their needs.
With the ease and quick accessibility to funds, voluminous people opt for loans. This surge in the number of applicants and their loaning requests has also augmented the risk of scams and loan fraud.
Suppose you want to safeguard yourself from dirty scammers who want to take advantage of your credentials. Then this blog will guide you to spot all the red flags which can lead to loan fraud, its types, and ways to protect yourself from this grave danger.
What is loan fraud? What are its types, and How it can be identified & prevented?
Loan fraud is all about stealing your private credentials to obtain a loan illegally. For instance, a fraudster opens a loan in your name or takes out an instant payday loan and vanishes. The whole amount that is to be repaid to the lender is on your head.
Several lending institutions offer cash loans today with minimal information and less paperwork. This makes it easy for fraudulent to commit loan frauds. Such scams are difficult to track, especially when it is operated from a different state or country.
Below mentioned are the most common loan frauds that should be avoided at any cost.
Credit card scam
This is among the major loan fraud that an identity burglar commits. After stealing your personal details, the thief applies for credit cards in your name. Once it gets approved, scammers can bury you in enormous debts and leave it to you to make its repayment.
Following are some credit card scams that can happen in various ways.
- Lost or stolen cards: Having many credit cards gives burglars more opportunities to get access to bank account numbers.
- Taking over account: A thief can contact your credit card issuer and use your robbed credentials to alter passwords, PINs, and mailing IDs.
- Cloning cards: Many scammers install ‘skimmers’ that are capable of stealing your credentials whenever you utilize them.
Fortunately, credit card companies are aware of these frauds, and most of them provide protection from such scams. But you have to be vigilant about any suspicious activity or if you see that your credit score is showing a sudden downfall.
Car loan scam
The thief uses the same practice as a credit card scam in this loan fraud. But here, instead of applying for a credit card in your name, the burglar applies for a car loan.
Car loan fraud can be more serious as the amount involved are huge than a credit card. This scam saw a sudden rise when dealers started offering car shopping online. This scenario made it easier for duplicitous people to apply for a car loan using your credentials.
Suppose you see any message from a dealer stating anything about the car loan. That means your credentials are hacked and are getting used for illegitimate purposes. Once you realize it, report this to the concerned authorities to avoid or minimize the effect.
Home mortgage scam
This is one of the distressing types of loan fraud. If thieves have enough personal data, including your social security pin and tax info, then they can apply for a home mortgage in your name.
Fraudulent can even forge ownership of your property and sell your home to any random buyer. To avoid this situation, try keeping your credentials as safe as possible and apply for a mortgage from a reliable source only.
Business loan scam
Scammers have established numerous tricks to cheat new entrepreneurs. They target small businesses and startups because they face issues securing a loan. Sometimes they don’t have any collateral, so the need to get urgent funds makes them fall victim to these burglaries.
You should always apply for a business loan from a credible lender only to avoid this loan fraud. You should go to the institution, visit its website, and go through its review given by real customers.
Ways to identify red flags
- Some fraudulent display big banners but don’t have any authentic website on their name.
- Lenders who are solely available on mobile apps are not mostly authorized. Do deep research before doing any partnership.
- Go through the reviews and shared experiences from former customers.
- Make sure your system and mobile are shielded with good antivirus software.
- Try keeping fewer credit cards as having many surges the risk of losing them and getting stolen.
A loan fraud requires your credentials, so it is a kind of identity stealing. Loan fraud is the most common kind of identity mugging. There are several ways in which an intruder can get access to your private information.
The dark web is the easiest method to purchase your personal details, from installing malware in your system to using phishing scams.
You should never reveal your personal information on your phone, and instead of putting your financial docs in the garbage, destroy all when you don’t use them.
Scams can devastate your life. Many people are already paying a hefty amount of money with fast loans in the UK with no guarantor that was left unpaid after the loan fraud.
If you don’t want to fall prey, read all these above popular scam types and even if you notice a minute suspicion in any section. Flag it up and report it ASAP.