I received an unexpected pre-approved offer, or live check loan, in the mail. What happens if I cash or deposit it?

Have you ever opened your mail and found an unexpected check? Some checks are refunds and payments due to you, others are sample advertisements, some are fake check scams , and some checks are pre-approved loan, or live check loan offers.

View a sample live check loan mailing.

What is a live check loan?

A live check is a preapproved or “prescreened” loan offer that you did not apply for. It may be from a lender you have borrowed from in the past or from a new lender. The loan amounts usually range from several hundred to several thousand dollars. The check should come with the following information:

• A disclosure of the loan fees
• The annual percentage rate (APR)—which is the cost of the loan on a yearly basis
• The payment schedule
• The loan agreement
• A privacy notice about the sharing of your personal information
• Your right to exclude your name from future offers—called an opt-out notice
• Contact information for the sender

Live check loans may have higher interest rates than other types of personal loans or credit cards, so it’s a good idea to shop around and compare terms before accepting a live loan check.

Is this pre-approved loan offer a scam?

Scammers sometimes send fake loan offers via mail, email, or text. These may look very similar to actual live check loan offers, but they are used to get your personal or financial information in order to commit identity theft or fraud. Learn more about check scams from the FTC.

Should I accept a live check loan?

Live check loans may be convenient, since you do not have to complete a loan application or file paperwork. However, live check loans may have much higher interest rates than other loans or credit cards. If you are interested in a loan or line of credit, you should shop around for information about the benefits and costs of all options. It’s also a good idea to research the live check lender to make sure they’re legitimate and not a scammer. Keep in mind that the best way to maintain a strong credit score and not waste money on interest and fees is to create a budget and save for what you need instead of using credit or a loan.

How does a live check work?

If you want to accept the live check loan, you must endorse the check by signing the back of the check and cashing or depositing the funds into your bank account. This creates a loan that you must repay on the due dates described in the loan agreement. If you pay late or do not pay, you may be charged fees along with interest, and the lender may report your debt to a credit reporting agency which could affect your credit score. To reject the loan offer, you should securely destroy—by shredding and throwing away—the live check to avoid potential fraudulent use by others.

How to stop unsolicited loan offers

Lenders offer live check loans based on information about your credit history from your credit report. If you do not want to receive live checks or other unsolicited loan offers, you have the right under the Fair Credit Reporting Act to opt out of future offers for five years or permanently. To opt out for five years, call 1-888-5-OPTOUT (1-888-567-8688) or visit OptOutPrescreen . To opt out permanently, visit OptOutPreScreen  and return a signed “Permanent Opt-Out Election form,” which they will send after you make the request. Learn more about opting out of unsolicited loan offers.