Los Angeles, CA asked in Foreclosure for California

Q: Can a lender give you a loan based on a fraudulent credit score?

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2 Lawyer Answers
James L. Arrasmith
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  • Foreclosure Defense Lawyer
  • Sacramento, CA
  • Licensed in California

A: No, a lender cannot legally give you a loan based on a fraudulent credit score in California or anywhere else in the United States. Knowingly using a fraudulent credit score to obtain a loan would be considered loan fraud, which is illegal.

Here are a few key points about loan fraud and credit scores:

1. It is illegal for a borrower to knowingly misrepresent their credit score or provide false information on a loan application.

2. Lenders are required to verify the information provided on loan applications, including the borrower's credit score, to ensure its accuracy and authenticity.

3. If a lender discovers that a loan was obtained using a fraudulent credit score, they can take legal action against the borrower, including demanding immediate repayment of the loan and pursuing criminal charges.

4. Borrowers who engage in loan fraud may face serious consequences, such as fines, damage to their credit report, and even imprisonment.

It's important for both borrowers and lenders to maintain honesty and integrity throughout the loan application process. If you believe that your credit score is inaccurate, you should contact the credit reporting agencies to dispute any errors and have them corrected before applying for a loan.

Delaram Keshvarian
Delaram Keshvarian
  • Foreclosure Defense Lawyer
  • Orange, CA
  • Licensed in California

A: Thank you for your question!

Yes, the lender may rely on a fraudulent credit score during lending. Later, when the interest rates of loans go up, the lender can foreclose borrower's property at a distressed price based on fraud (which has both criminal and civil penalty).

This is merely a discussion of general laws and not legal advice. For legal advice, more specific facts and investigations are needed. I recommend you consult with an attorney for more details.

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