As credit availability diminishes, credit scammers are having a feast at the expense of many Americans who desperately need access to credit. One of the most common credit scams is the “advance fee loan.”
The Way It Works

Credit scammers target consumers who are having financial problems, facing foreclosure or delinquent on their credit card payments . These scammers make false promises to the consumers that they can get a lower interest rate, usually too low to be true. For example, they may say that they can lower your mortgage loan’s interest rate or your credit card interest rate in exchange for an upfront fee.
Usually the fee is high and it must be paid by some untraceable way, such as via a money wire transfer or money order. Sometimes the scammer will actually apply for a legitimate credit card loan or mortgage loan that they know the applicant does not qualify for. Sometimes the scammer informs the victim that they were declined for the loan and other times they just disappear with the victim’s money.

How To Avoid This Scam

Be realistic. If you’re facing foreclosure or are delinquent on your credit card payments usually you cannot qualify for a lower interest loan or even a higher interest loan.
Do your research. Don’t just hand over your money and personal information to anyone who promises you the moon. Do your homework on the company and find out if they are legitimate and if they have any complaints against them. Usually a quick internet search will reveal any complaints.
Never pay an advance fee for a loan. Legitimate lenders don’t ask for upfront fees. If a lender charges a fee, it should be charged after they have secured your loan. Remember, sometimes you can negotiate with credit card lenders or mortgage lenders for lower interest rates.