Short answer: before you apply, look the company up. Search its license in NMLS Consumer Access, and if it is not there, ask your state's financial regulator, which you can find in the CSBS directory. If it says it is a bank or credit union, check it in the FDIC's or NCUA's own tools. Then read how it handles complaints in the CFPB's database, and make sure its disclosures and contact details are real. It takes a few minutes and costs nothing.
1. Search the license
- Search the company's exact legal name, and the NMLS ID number if it shows one, in NMLS Consumer Access. Check that the license is for your state and is active. The site sometimes pauses lookups while it updates; try again later if it does.
- If you cannot find it, contact your state's agency that licenses lenders, listed in the CSBS directory, and ask whether the company is licensed to lend to people in your state. How state rules differ is in loan rules by state.
- Match the details: the name, address and NMLS number on the website or offer should be the same as in the lookup.
2. Banks and credit unions
If the lender says it is a bank, find it in the FDIC's BankFind, which lists FDIC-insured banks and branches. If it says it is a credit union, look it up in the NCUA's Research a Credit Union tool. A website that borrows a real bank's name is not the bank: contact the institution using the details in those tools and ask whether the offer is theirs.
3. Read the complaints
The CFPB's Consumer Complaint Database lets you search complaints sent to companies and see how they responded. Keep in mind what the CFPB says about it (CFPB):
- It is not a statistical sample, so complaints are not representative of all customers.
- Larger companies with more customers may have more complaints; compare with size in mind.
- Complaints are published only after the company responds or after 15 days, and complaints the CFPB refers to other regulators, such as those about smaller banks and credit unions, are not published.
Look for patterns, such as many complaints about surprise fees or about payments taken without permission, and for how the company responds.
4. Check the paperwork
- Before you sign, a lender must give you disclosures with the APR, finance charge, amount financed and total of payments (12 CFR 1026.18). Read them; see how to read a loan disclosure.
- Look for a full company name, a physical address and a phone number you can call, and check that they match the license lookup.
- Keep copies of everything, including screenshots of the offer.
5. Walk away if
- It asks for a fee before you get the loan, a warning sign the FTC describes (FTC); see advance fee loan scams.
- It cannot be found in NMLS Consumer Access or by your state regulator, and will not give you a license number.
- Its name, address or license number do not match what the lookup shows.
- It pressures you to decide right away or asks for payment by gift card, wire or cryptocurrency (FTC).
If something went wrong with a lender, see how to file a loan complaint.
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Disclosure: Modern Lending Solutions is not a lender, loan broker or agent for any lender or loan broker, and does not make credit decisions. Any compensation we receive is paid by participating lenders, only for advertising services. This guide is general information, not financial or legal advice.
Sources
- NMLS Consumer Access (state license lookup)
- CSBS: Contact Your State Bank Agency (directory of state regulators)
- FDIC: BankFind Suite, Find Insured Banks
- NCUA: Research a Credit Union
- CFPB: Consumer Complaint Database
- FTC: What To Know About Advance-Fee Loans
- FTC: Imposter Scams
- Regulation Z, 12 CFR 1026.18: content of closed-end disclosures