With the economy being how it has been in the last couple of years, more and more banks are imposing stiffer penalties for delinquent borrowers while turning away those in real need of additional credit or even just a small loan. Individuals whose incomes are not as high as is ideal but have no history of bad credit whatsoever continue to suffer the negative perception that the banking industry attaches to low-earners. These circumstances encourage people to look for alternative, sometimes more expensive, financing elsewhere.

The introduction of lenders and loan brokers online opens up a whole new range of options which credit consumers can potentially benefit from. The problem is that when a person becomes overly desperate or is in a panic to find as much debt help as he or she could grasp, discerning a loan company’s reputation ends up being neglected. Disreputable lenders make money by offering attractive low-rate loans to reel in possible victims. The cheaper the fake loan seems, the more tempting it becomes to take it. Anybody then that takes the bait is tricked into paying an upfront fee prior to receiving the loan itself. The loan never does materialize and the concerned lender becomes unreachable at that point.

For anyone who may be on the brink of losing a home or is constantly missing out on credit card payments each month because of sudden unemployment or reduction of hours at work, every opportunity to repair personal finances will always be worth a look at. Whether it be for a personal loan, homeowner or any bad credit loan, never forget to check a lender’s credentials first before dealing with them to avoid fake companies from dragging you even deeper in debt.

Using the information that they have come across on people’s Facebook pages, fraudsters are able to open bank accounts and take out credit cards and personal loans in their victim’s name.

The warning was sounded by a BBC1 consumer show Watchdog. The show conducted an experiment in which they set up a fictional identity on Facebook. The Watchdog team then invited 100 random people to become friends with their newly created fictional character ‘Amba’.

35 of those invited to become Amba’s friend immediately accepted the request despite knowing nothing about her. By accepting, the victims allowed the fictional Watchdog character to view any private details that they had posted on their page.

Details which could easily be accessed included date of birth as well as hometown. The Watchdog team then used these details in order to obtain more private details about their victims from other publicly available websites.

With this information Watchdog then opened up an online bank account in their victims’ names as well as successfully applying for credit cards.

One of the victims, Scott Gould, stated that he was “very surprised” by what Watchdog managed to do despite having only the slightest bits of information about him.

Users of Facebook as well as all other social networking sights are advised to be very careful when posting their details. Fraudsters often leave a trail of bad debts behind them, in Your name. Not only is the onus on you to prove that you are not responsible, it is hard work correcting your damaged credit rating.

Many cash withdrawals are being carried out using cards that do not have a security chip and the shocking thing is that it is the banks themselves that are allowing this to happen.

This is how it works. Currently there are roughly 140m cards in circulation in the UK and every day an average of 7m withdrawals are made from UK cash machines. Now it is only to be expected that some of these cards will be slightly faulty therefore if banks were to reject cards with a slight fault they would then be inundated with complaints from angry customers who could not withdraw their own money.

This has left the door open to fraudsters who can use cloned bank cards that do not come with a chip to get their hands on other peoples’ cash. This leaves bank claims that the system is foolproof as completely false.

The banking industry trade association for payments has admitted that an undisclosed number of the UK’s 60,500 cash machines will allow cloned cards to withdraw money provided the cloned card is used with the correct pin number.

Because bank customers are not protected from fraud in the way that credit card holders are, account holders could find themselves fleeced of their entire balance with no redress. Not only are people finding themselves without the money to meet their home loan repayments or rent, they are going into unauthorised overdrafts and forced to borrow money to cover the shortfall.

The whole story revolves around a care worker employed by the citizens advice bureau who claims she was advised by her broker to lie about her salary when trying to secure her mortgage.

Sandra Ashcroft, 59, told her bank she received a £35,000 salary as a mid-wife in order to secure a home loan of £102,000 in 2003. She then applied to increase that mortgage to £122,000 after telling the bank she earned £80,000 working in the public services. Ms Ashcroft actually only earned between £3000 and £5,500.

What Mrs Ashcroft did was highly illegal and she was charged for obtaining money transfers by deception. She was given a six-month suspended sentence but the judge said that there was evidence to suggest that she had been steered towards giving misleading information.

The danger often lies with the temptation offered by self-cert loans and mortgages. These were created for self-employed workers or business owners who don’t always have records of their income. Whilst these loans are vital for those who have an income that doesn’t come from a salaried job, they open a window for people to try to obtain credit they cannot repay by lying on their application.

So if you are thinking of lying on an application for a mortgage or even if your broker is encouraging you to lie do not be tempted. This is a very dangerous route to take and if you are caught out you could face losing your house, ruining your credit rating and even a jail sentence. So always consult the mortgage company or even a lawyer if you are unsure about specific details on your loan application form.

If you fail to cancel your cards once you stop using them you may end up forgetting that you ever had them.  Often if your account has no activity you will most likely end up not receiving a statement to remind you of the account.  So if someone gets a hold of your information and changes the billing address, you will easily miss that and fall victim to identity fraud.  Once someone has your details they can easily go further and take out expensive personal loans or even mortgages in your name. Typically these fraudsters will very quickly default on payments, leaving the black marks on your credit record. Often the first you will know of the matter is when you yourself are turned down for loans or mortgages.

One way of protecting yourself is by checking your credit report, and if you find in-active accounts listed on your report, then you should close them the ensure you do not end up a victim of fraud.

Mortgage fraud takes many forms, including stealing property using various methods of deception, obtaining a money transfer by deception, signing mortgages, and selling third party homes.

Victims are left with no hope of proving that they were not involved in the scam and are accused of hide the proceeds of the scam. Most victims hope that they are protected by banks and loan lenders, but sadly this is not always the case.  Many people have been left with 40 year mortgages in their name and what appears to be a history of bad debts and defaults on secured loans.

The Department of Productivity, Energy and Industry (DPEI) closed a buy-to-let scam, in 1995, which promised to help investors make money in the property market.  Three companies linked to the scam ended up at the High Court, following confidential investigations by the DPEI.

These companies took “substantial sums of money” and promised that they would help clients to build a portfolio worth £1 million a year.

In 2005, DPEI Minister Gerry Sutcliffe said: “These companies knew that their clients, who had all invested substantial amounts of money, couldn’t make anything like the returns that were promised. The schemes were completely misleading and set up with the sole aim of parting people from their money.”

Consumers are warned to avoid any investment scheme that promises too much, or very little risk. They are also warned to avoid anything that asks for personal information before explaining the company’s intent.

The Institute of Payroll Professionals (IPP), is seeing an increasing number of websites which now offer ‘duplicate’ payslips, without taking time to check whether the customers information is valid.

These websites cannot legally verify the details provided by consumers looking to buy fake pay slips as the only official parties who would prove salary information – the payroll departments of their employer and the HMRC – are bound by the Data Protection Act,” the IPP website confirms.

This will increase debt and insolvencies as more homeowners are struggling to make payments they cannot afford. Analysts are worried that, if this becomes a wide spread practice, that it will create a false image of the economy as more and more people apply for bankruptcy and IVAs.

Richard Fiddis, Managing Director, at the global information solutions company Experian, said:

“Insolvencies rose by two-thirds in the second quarter of this year, while IVAs, which make up almost half the total, soared by over 150 per cent.”

“One of the most striking differences between those opting for bankruptcy and those for an IVA is illustrated by socio-economic analysis,” continues Fiddis. “Experian’s Mosaic consumer segmentation system shows that people in the ‘Happy Families’ group, comprising largely young families, are more than 60% more likely to be tempted by an IVA.”

These numbers will increase as people continue to ‘fake’ mortgage and personal loan applications.