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Bad Credit Repair > A New Credit Identity Will Solve Your Problems?
A New Credit Identity Will Solve Your Problems? |
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People who cannot obtain credit because of past problems with paying bills need bad credit repair. They may be tempted by claims that companies can erase bad credit or repair credit for $100. However, think twice before taking such a step. A bad credit repair company may encourage you to create an entirely new credit record by a method known as file segregation. In this scheme, you are promised a chance to hide unfavorable credit information by establishing a new credit identity. That may sound perfect, especially if you're afraid that you won't get any credit due to a bankruptcy on your credit record. If you sign up for one of these services, you will most likely be instructed to apply for an employer identification number (EIN) from the Internal Revenue Service (IRS). EINs are like Social Security numbers and are used by businesses to report financial information to government agencies. Once you have this number, the bad credit repair service will tell you to use it in place of your Social Security number on credit applications. They may also instruct you to use a new mailing address and offer some credit references. Their explanation is that because your credit file is tied to your name and Social Security number, using this new number and information allows you to create a brand new credit file. Credit-grantors requesting a credit report with your name and new number will never see your previous file with all the negative information it contains. The bad credit repair service will most likely offer very reasonable and legitimate sounding cautions. They'll remind you that to make this clean slate count, you have to pay your bills on time from now on. They'll also tell you it will take 60-90 days before your new credit rating really begins to work for you. To convince you to establish a new credit identity, the bad credit repair service is likely to make a variety of false claims. Listen carefully; these false claims, along with the pitch for getting a new credit identity, should alert you to the possibility of fraud. You'll probably hear: --You will not be able to get credit for 10 years (the period of time bankruptcy information may stay on your credit record). Each creditor has its own criteria for granting credit. While one may reject your application because of a bankruptcy, another may grant you credit shortly after you filed for bankruptcy. And, given a new reliable payment record, your chances of getting credit will probably increase as time passes. --The company or file segregation program is affiliated with the government. The federal government does not support or work with companies that offer such programs. --The file segregation program is legal. It is a federal crime to make any false statements on a loan or credit application. Despite what many bad credit repair organizations tell consumers that file segregation is illegal. It is a crime for any consumer to misrepresent his or her social security number or to obtain an EIN from the IRS under false pretenses. Consumers may find themselves charged with mail or wire fraud if they use the mail or telephone to apply for credit and provide false information. Consumers may also be sued for civil fraud under many state laws. Never do business with any credit service organization without first checking with your State Attorney General office or the Better Business Bureau. If you feel you have been a victim of a bad credit repair scam, contact your State Attorney General. And beware of bad credit repair companies that require you to pay money upfront. If you think that you cannot repair your credit on your own, contact any legitimate credit counseling service instead of a bad credit repair company; it will surely show you the way to get out from your bad credit situation. |
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