5 Credit-Related Scams You Should Know How to Spot

Building better credit can feel like a matter of trust. You put faith in yourself to show the discipline and follow-through to raise your credit score, even when building positive, lasting habits takes more time than you’d like. And you trust that, as your credit improves, you’ll have access to more affordable borrowing and face fewer financial hurdles to achieving certain life goals, like homeownership.

Unfortunately, some people will take advantage of your belief that a better credit score is within reach. These scammers turn your desire against you, promising easy approval for a credit card or loan that doesn’t exist while getting you to share confidential financial information that very much does. Fraudsters might also con you into paying fees for credit-boosting services that are about as real as the Tooth Fairy or the Easter Bunny.

To help you protect yourself, we’ve rounded up five common credit-related scams you should know about.

1. The Guaranteed Loan Approval Scam

When you’re still building your credit history, every loan or credit card application might come with your heart pounding in anxiety. Getting approved isn’t always easy, so an offer that promises guaranteed approval might seem like exactly what you need. That’s what scammers are hoping, anyway, when they contact you about a loan or credit card you don’t remember applying for.

If you respond, figuring you could still benefit from the offer, the scammer might ask for crucial information like your Social Security number, bank account details or birth date. Sometimes, the message will say that your application is “almost finished” and you “should be in good shape” as long as they can get those extra details. Oh, and you just need to pay an “insurance fee” or “processing charge” before the money is released.

You can protect yourself by putting your thinking cap on when those messages come in. Legitimate lenders might send unsolicited offers, but they won’t guarantee that you’ll receive a loan regardless of your credit history in exchange for an upfront fee.

Legitimate lenders won’t guarantee you a loan regardless of your credit history in exchange for an upfront fee.

Research the lender before sharing personal or financial information. Be especially cautious if someone guarantees approval, pressures you to act immediately or asks you to pay through gift cards, wire transfers or cryptocurrency. The Federal Trade Commission has more advice on spotting advance-fee loan scams.

2. The Fake Credit Card Offer

If a credit card offer seems almost too good to be true, well, we have some bad news for you: It might be exactly that. Scammers sometimes impersonate banks and card issuers, advertising attractive rewards, unusually low interest rates or easy approval to get people to hand over personal information.

You might encounter these offers in emails, text messages, social media ads or websites designed to look like they belong to a legitimate financial institution. And if you don’t believe these scams can be convincing, just ask the people who signed up for the Gainesway Credit card.

According to TheStreet’s reporting, a direct marketing company called Group One Networks marketed the Gainesway card from 2006 to 2008 as a general-purpose charge account offering 0% interest and up to $10,000 in available credit.

The catch? Customers faced fees of up to $250 to use the card. Worse, the Gainesway card wasn’t a general-purpose credit card at all. It was an online shopping card that could only be used to purchase items from the company’s online catalogs.

To avoid getting taken in by a similar offer, verify it through the card issuer’s official website or customer service number. Read the terms carefully, including any fees and restrictions on where you can use the card. And never provide sensitive information simply because an offer looks official.

3. The Fake Debt Collection Scam

A caller claims you owe money on an overdue account. Before you can ask for more details, they threaten legal action, wage garnishment or even arrest unless you pay immediately. Sometimes, they’ll have personal information about you to make the demand sound legitimate.

Having an account in collections can affect your credit, and you don’t want to dig yourself into a deeper financial hole while working toward better credit — or go to jail, since orange is definitely not your color. You might panic and give the caller what they want.

If you get a call like this, don’t panic. Ask for the collector’s name, company, mailing address and details about the debt. Don’t share bank account information or make an immediate payment just because someone threatens you. Verify the debt independently, and remember that legitimate debt collectors must follow federal rules governing collection practices. Threats of arrest over an unpaid consumer debt are a major red flag.

Threats of arrest over an unpaid consumer debt are a major red flag.

4. The Credit Report Phishing Scam

You open your phone to find an email or text warning that someone has accessed your credit report or that your credit score has suddenly dropped. There’s a link to click to check your account or resolve the supposed problem.

The message might look like it comes from a credit bureau, bank or financial service. But the link could take you to a fake website designed to steal your login credentials or personal information. Worried about what might happen to your credit, you click before thinking it through.

Remember, scammers often use a technique called false urgency to make people act before they stop to question the message.

Don’t click links in unexpected messages about your credit. Instead, visit the company’s official website directly or use a verified phone number to check whether there’s a real issue. You can also review your credit reports through AnnualCreditReport.com.

5. The Identity Theft and Impersonation Scam

Sometimes, a scammer doesn’t need to promise a loan or threaten a debt. They simply pretend to be a trusted institution, such as your bank, a government agency or a financial service provider, and ask you to verify your identity.

They might request your Social Security number, account password, one-time verification code or payment to resolve a supposed problem. Once they have that information, they could use it to access accounts, open new accounts or commit identity theft.

Be skeptical of unexpected requests for sensitive information, even if the person knows your name or other details. Contact the organization using a trusted phone number or website, and never share a one-time security code with someone who contacts you unexpectedly.

Protect Your Credit by Staying One Step Ahead

You don’t need to be an expert in financial fraud to recognize an offer or message that smells a little fishy. You just need to trust yourself and your ability to slow down when someone pressures you to act, verify unexpected messages independently, and think twice before handing over personal information or money.

If an offer sounds unusually generous or a caller insists you must act right now, take a moment to investigate. A legitimate financial institution shouldn’t need you to make a rushed decision to protect your money or your credit.

A legitimate financial institution shouldn’t need you to make a rushed decision to protect your money or your credit.

And remember, keeping an eye on your credit reports and account activity helps you spot unfamiliar activity sooner. The more informed you are, the harder it is for a scammer to catch you off guard.