How to spot a no-credit loan scam
These types of loans often charge astronomically high interest rates and fees – sometimes 300% to 500% APR. They also have ways of keeping you trapped in debt for even longer.
Your payments on these types of loans are also generally not reported to the credit bureaus, meaning they won’t even help you build 
credit that could help you qualify for better loans in the future.
There are also plenty of scam artists looking to take advantage of borrowers desperate for a loan. Here are several personal loan scam warning signs to keep an eye out for:
- Not requiring a credit check: Legitimate personal loan companies typically review your credit to determine your creditworthiness. While some short-term loans – such as payday or pawn shop loans – don’t require a credit check, others could be a scam.
- Demanding upfront payment: You should never have to pay money before you get your loan funds. Also watch out for scammers wanting you to pay through unusual methods that can’t be tracked, such as with a prepaid credit card.
- Using high-pressure sales tactics: Scammers might use language like “limited-time offer” or “act now” to push you into making a fast, uninformed decision.
- Approaching you about the loan: While legitimate companies sometimes advertise through the mail with preapproved loan offers, a company approaching you out of the blue with a loan offer could be a scam.
- Lacking a physical location: A real, vetted loan company should be able to provide a physical address that you can verify. If not, it might be a scam.
- Not feeling comfortable: Trust your gut – if something seems off, it probably is.
You can also review the lender’s Better Business Bureau (BBB) reviews – though keep in mind that the BBB isn’t a definitive source for determining whether a lender is legitimate.
No matter what type of personal loan you choose, be sure to consider how much the loan will cost you over time. You can estimate how much you’ll pay for a loan using our personal loan calculator below.
With a $ loan, you will pay $ monthly and a total of $ in interest over the life of your loan. You will pay a total of $ over the life of the loan.
How to build credit history
It’s a good idea to focus on building your credit history so you can more easily qualify for loans in the future.
Having good credit can help you in your everyday life, too, such as if you want to rent an apartment or get competitive rates on insurance.
- Take out a small secured loan or a credit-builder loan. Payment history makes up the biggest chunk of your credit score, which means making on-time payments over the life of a loan can help build your credit history.
- Get a secured credit card. This type of card is secured by a deposit and can help diversity your credit. Be sure to make on-time payments.
- Ask if you can be an authorized credit card user for a trusted friend or relative. You typically don’t even have to use the card for this to improve your credit.
How to monitor your credit
As you work to build your credit, it’s also a good idea to monitor your credit. This way, you can see where you might need to make improvements as well as keep an eye out for potential fraud. Here are a few ways to do this:
- Review your credit reports. You’re entitled to a copy of your credit report from each of the three credit bureaus – Equifax, Experian, and TransUnion – every 12 months. You can use a site like to review your credit reports for free. If you’d like to review your credit throughout the year, you might consider accessing a report from one of the credit bureaus every four months.