We’re so used to opening up the papers or turning on the TV news and hearing stories of unfortunate people who have been unwittingly caught up in credit scams and have lost everything or indeed a great deal of their money. It seems that many of us are unaware of what they are and the traps they can fall into. Here are the most common credit scams – and ways in which you can protect yourself.
Phishing
With the rise of the internet comes the rise of the internet scam. Phishing is one such phenomena. It’s the ability by fraudsters to acquire sensitive information such as usernames, passwords and other materials by posing as seemingly genuine organisations online. You may be contacted via email by something or someone that looks innocuous enough and be tricked into giving your details away. You should avoid following any links to banks or other financial institutions via email and only go direct to their sites from links you know and trust from safe search engines. If you’re ever suspicious you might have been hit by a credit scam via phishing, report the email or contact details.
Unauthorized Billing
Check all your bank and credit statements carefully, to make sure all the payments you have scheduled to go out are genuine and that none of them are from sources you do not know. It may take more time, but more often than not one of the easiest ways to uncover credit scams is to discover fraudsters have somehow managed to get you bank details and organize small payments to come out of your account that you don’t notice until you scrutinize your accounts more thoroughly.
File Segregation
This is one of the most frightening credit scams in which someone is offered new Social Security Number or Employer Identification Number and instructs the victim to fill out loan documents to this effect. This is highly illegal and the scam relies on the victim believing the lie that if they have been forced into bankruptcy they will not be able to get any loans and will have a bad credit history for ten years. If you’re savvy and careful enough, even if you have a bad credit history you will find that there are companies out there who will give loans – they might make you pay them back over a slightly longer period, but even with bad credit history you should still be able to get them.
Credit Repair
These are services which falsely advertise and claim they can erase a bad credit history or fix bad credit for you. The problem with this is that no company can erase a bad credit history from an account and it is illegal to suggest they can do so. If you’re in bad debt you can contact your creditors and ask them to help you set up a secure payment plan which you can stick to.
Advance Fee Loans
An advanced fee loan is a credit scam in which a lender will promise you a loan with low interest repayments. You will give them your personal details, they’ll agree to set it up and take a sum of money from you in advance, but then come back to you and tell you that you cannot have the loan – and very often they will then disappear with your money and your identity too.
Credit Insurance
Credit insurance is something legitimately offered by some companies to help in the event that there is an unforeseen circumstance in your life which cannot be avoided. There are credit scams surrounding this though, whereby some companies will fraudulently offer you lower premiums which seem more affordable and easier to manage, the premiums are collected but the companies don’t then fulfil their obligation when a client might have problems repaying their loan. The easiest way to solve this is to research the company you are considering using thoroughly and to make sure there is a cancellation policy in place if you need to use it.
Avoiding credit scams seems impossible sometimes as there are so many pitfalls and problems to be aware of If you keep in mind that if an offer seems too good to be true then it is, and always make sure to thoroughly research any company you wish to take out insurance or a loan with then you can protect yourself as far as possible. There will always be fraudsters and scammers around making life difficult for innocent people, but being aware and knowing how to protect yourself is very often half the battle won. If you’ve found yourself the victim of such a scam, it can take a while to recover from it and sometimes you can’t always get your money back, but there are ways out of these situations and there are always services and organisations who can help you.