Licensed Lenders: How to Verify Before You Apply
Why licensing and verification matter
The fastest way to save money on a loan is to avoid the wrong lender. Licensed lenders must follow state rules, provide required lender disclosures, and give you clear information about APR, fees, and your loan repayment schedule. Unlicensed operators can bury junk fees, perform illegal hard pulls, or push predatory terms that explode your total loan cost.
Step 1: Start with NMLS Consumer Access
Begin every vetting process at NMLS Consumer Access. Search the company name and confirm that the company exists, is licensed for the type of lending advertised, and that legal name and business address match the website and emails you see. Verify any DBAs (doing business as) match the brand.
If the name in your offer doesn’t appear, treat it as a red flag. Some scammers spoof legitimate names—compare the full street address and phone number against the record.
Step 2: Check your state regulator
Licensing is state-by-state. After NMLS, click through to your state regulator or use our State Guides to jump there. Confirm the lender (or broker/arranger) holds an active license for your state, the permitted activities, and whether there are any disciplinary actions.
Step 3: Compare disclosures
Read for APR and rate type (fixed or variable), origination fee, late fees, any prepayment penalty, grace period, the full repayment schedule, and funding method/timing (ACH, same-day ACH, push‑to‑debit, real‑time payments) plus your bank cutoff time.
Step 4: Use prequalification first
Use prequalification with a soft credit check to preview terms without a score hit. Final approval uses a hard pull.
Step 5: Confirm identity and income steps
Licensed lenders use standardized identity verification, proof of income, and bank account verification. If a site asks for prepaid gift cards or crypto to “verify identity,” walk away—it’s a hallmark of loan scams.
Step 6: Spot common scams
- “Guaranteed approval” with upfront fees.
- Pressure to sign before you can read disclosures.
- Funding “today” only if you pay a “processing” fee via non‑traceable methods.
- Unsolicited texts or DMs with off‑domain application links.
Step 7: Understand funding rails
“Fast loan deposit” depends on rails and cutoffs: same‑day ACH, push‑to‑debit, and real‑time payments (RTP) at participating banks. Ask which rails the lender supports and whether weekends/holidays are supported.
Quick checklist
- Verify licensing in NMLS and your state.
- Use soft‑pull prequalification first.
- Confirm fees and total cost.
- Understand repayment and real funding time.
- Avoid unlicensed offers and any request for upfront payment.
Keep learning: See Definitions or more guides on our blog.