Credit in NJLow credit score? It makes getting a loan or credit card nearly impossible. No matter how hard you work and how much you need the cash or the credit, you can’t seem to get around that score. Where can you turn when you need credit but can’t get it? Wherever you look for credit, beware of scams!

The Credit Process

To get a loan or credit card, you’ll have to open up your credit history to your lender. They’ll take your personal information and get a copy of your credit report from one or more of the three major credit reporting agencies: TransUnion, Equifax, and Experian. The credit reporting agencies collect your payment history, debt settlements, and bankruptcies from banks, credit card companies, and many other sources to create your credit report. All of these factors go into your credit score, which denotes your creditworthiness. Your credit score is between 300 and 800, with 800 being perfect. Your credit score is higher when you make your payments on time and in full and it drops with missed payments, bankruptcies, and debt settlements. Your score also drops with “credit inquiries,” meaning every time someone checks your credit score, it drops a little lower. Applying too frequently for credit can be as bad as missing a payment.

Your credit score largely determines whether you can get a loan or credit. It also determines what interest rate you’ll pay if you do get a loan or credit. If your score is too low, you may not be able to get a loan or credit card at any interest rate or for any amount of annual fees. The issuer may feel that the risk that you’ll default is too high to justify extending credit.

Advance Fee Loans

If your credit score is low and you need a loan or credit, you probably feel extremely frustrated by ordinary lenders. You may be tempted to try to find cash or credit elsewhere. One common predator on the cash-strapped consumer is the payday lender. Of course, payday lending isn’t the only scam out there targeting cash-strapped, low-credit consumers.

As state and federal laws crack down on payday lending, advance-fee loan scams are becoming increasingly common. A company will send you an offer in the mail, call you over the phone, or place ads on television for guaranteed loans or credit cards. They promise not to check your credit score or hassle you over your credit history. They promise to get you the money you need; you just have to pay a simple upfront fee.

If all the major lenders turn you down, why would this company show up out of the blue to hand you cash? The companies offering guaranteed loans aren’t real. They’ll collect your upfront fee, promise you a loan, and then disappear. To take their fee, they’ll often collect your personal information, giving them access to your bank account and leaving you vulnerable to identity theft.

I need a loan. What should I watch out for?

The three biggest red flags for loan scams are: offers of guaranteed credit, upfront fees, and loans offered over the phone. Guaranteed credit is a lie – credit issuers who will actually give you a loan care whether you’ll pay them back or not, which means they want to know your credit history. An issuer who doesn’t check your history doesn’t intend to ever give you a loan. Upfront fees are illegal under federal and state law. Anyone asking for an upfront fee is breaking the law and is most likely a crook. Check out the fees they’re charging. Legitimate lenders have to clearly state their fees; scam artists often use vague language or fail to identify the amount of fees. They’ll take whatever they want because they’ll have access to your bank account. Finally, it’s illegal to offer a loan or credit card over the phone in exchange for an upfront fee. If someone offers you credit for a fee on the phone, just hang up!

In addition to these big red flags, do your research on the company offering the loan. Is it real? Look it up online. Check that the phone number connects and the address is real. Beware of PO Boxes instead of physical addresses. You can also check with the New Jersey Attorney General’s office. Credit issuers are required by law to register there, so if the company isn’t listed, it’s a scam.  Lastly, never pay an individual and never pay by wire transfer. Payments to individuals and payments by wire are difficult to track and make it easy for the scam artist to disappear with your fee.

New Jersey Law

Under federal law, no one can charge an upfront fee for a loan or credit card. New Jersey’s Consumer Fraud Act further protects residents of the Garden State from any misleading credit practices – which includes offering a loan without the intention of actually giving it. Credit issuers must be registered with the state and give you detailed documentation of the amounts and types of fees they charge and they can’t charge you anything without giving you credit.

I have a low credit score. How can I get credit?

The first step is to reach out to family and friends for small loans. If you need cash now, they can probably help you fastest. To build a credit score up, apply for a credit card or a loan with a cosigner. A cosigner promises to pay if you don’t, meaning that lenders will be much more willing to extend credit to you. If you’re struggling with your credit, contact one of the US Trustee-approved credit counseling agencies in New Jersey. Many of these agencies are non-profits and can give you the help you need for free. If you’ve been the victim of an advance-fee loan scam, contact the Attorney General’s office or local law enforcement so they can shut the perpetrator down. Then contact an experienced attorney to get your money back.

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