Pay-in-Advance Credit Offers — October 2011, reviewed January 2013

Obtaining credit can be a huge issue, particularly if someone has declared bankruptcy or gone through foreclosure.  Unfortunately, those who have financial management issues become the target for “pay-in-advance credit offers’.

Say for instance, you get the ‘good’ news that you’ve been ‘pre-qualified’ to get a low-interest loan or credit card, or a company can repair your bad credit even though banks have turned you down.  To take advantage of the offer, you have to ante up a processing fee of several hundred dollars.

A legitimate “pre-qualified” offer means you’ve been selected to apply for a credit card or loan.  You still have to complete an application, and you can still be turned down.  If you paid a fee in advance for the promise of a loan or credit card, you’ve been hustled.  You might get a list of lenders, but there’s no loan, and the person you’ve paid has taken your money.  It’s very unlikely you’ll be able to depend on that loan or get your money back.

Legitimate lenders never ‘guarantee” a card or loan before you apply.  They may require that you pay application, appraisal, or credit report fees, but these fees rarely are required before the lender is identified and the application is completed.  In addition, you’re generally required to pay the fees to the lender, not to the broker or person who supposedly arranged the ‘guaranteed’ loan.

Be smart, avoid pay-in-advance credit offers.  If you do get scammed, contact the MN Attorney General’s Office at 651-296-3353 or 1-800-657-3787.

For more detailed information go to Federal Trade Commission website: