Phony sweepstakes scams can cause bad credit

Many Americans dream about winning millions of dollars for an early retirement in a tropical setting. As a result, some individuals may apply for sweepstakes online that can leave them with a need to repair bad credit.

While in some cases consumers may end up winning a big prize through a legitimate giveaway, some online sweepstakes competitions are carefully disguised phishing scams.

Due to the potential danger of credit damage, consumers may want to do extra research on sweepstakes offers they receive by email, phone or traditional mailings, Consumer Affairs reports. Individuals should also avoid responding to any message that requires an additional purchase, as this is often a red flag for a phishing scam.

Americans may want to avoid applications that ask for too much personal information, such as their bank account details or credit card numbers. This is because criminals often use this information to rack up big expenditures on a victim's credit card account.

However, consumers who think they may have unwittingly given away their information may benefit from checking their credit reports or contacting a credit lawyer. By taking these extra steps, consumers may be able to avoid severe credit damage.