Never put money down on a promise. Any legitimate lender does not provide an upfront “guarantee” before you apply for a loan or a credit card.
The Sales Pitch:
You receive great news that you pre-qualify for a credit card, low-interest loan or a program to improve your bad credit despite being turned down by major banks. In order to benefit from the offer, however, you are required to pay a processing fee that can cost in excess of a few hundred dollars.
The Reality:
The offer that you pre-qualify for simply means that you have been selected to submit a loan or credit card application. Upon completing the application, it’s still possible to be turned down. That money that you paid in advance for the credit card or loan guarantee was for nothing. You may even be provided with a list of potential lenders, but when you follow up with each one you are rejected for every line of credit. In the end, you’ve lost the advanced payment and you still don’t have a loan.
What You Should Do:
Never pay a fee in exchange for a guarantee that you will qualify for a loan or credit card before you even apply. Legitimate lenders may charge fees for such things as an appraisal, credit report or to process the application, but such fees are never required without the consumer knowing the lender name and completing an application. Additionally, you typically pay any fees directly to the lender, not to a broker or third-party who claims they’ve delivered a “guaranteed” line of credit.