Important Note: We didn't try this method and we are not sure if it is safe.
Step 1. Create backup version of your iPhone.
Step 2. Download Hacktivate tool for your iPhone 4 from here. Install it and launch.
Step 3. Enter the DFU mode on your handset. To enter it, press your Power button for three seconds. Keep pressing it and hold down Home button at the same time for another ten seconds. You can now let go of your Power button while still pressing on your Home button.
Step 4. Click on Button 1 – this will start the ssh_rd process. Don’t do anything until it is complete.
Step 5. Click on Number 2 – this will mount the iPhone filesystem.
Step 6. Press on Number 3 – this procedure should copy the required files for further hacktivation.
Step 7. Wait till your smarthone reboots and enters Restore state.
Step 8. You need to Exit Recovery now.
Step 9. In order to bypass iOS 7 activation lock on iPhone 4 and 5 you should download Bypass Tool and enter the DFU mode once again.
Step 10. Start ssh.jar program and let it complete its process [it should say “successful”].
Step 11. Launch winSCP[you can alternatively use PuTTy program].
Step 12. Here are the settings for the new connection you will open:
Host name 127.0.0.1
Step 13. Click on the small terminal window in winSCP. You need to enter this command: mount.sh6 and then get rid of setup.app program. To do this you should open /mnt1/var/Applications and right click it to delete setup.app.
Step 14. Users who wanted to bypass activation are nearly finished. It is only required to reboot and do a couple of other things as your iPhone is now in Recovery mode. TinyUmbrella will help you here.