How Not to Repair your Creditby Steve Cypher on Wednesday, June 13th, 2012
Following the rule that if it seems too good to be true it probably is should indicate that there are no easy fixes to bad credit
The easy way
Applicants with less than perfect credit often want to know if there are any quick credit repair programs.
The answer we give them here at Auto Credit Express is usually not the one they want to hear and we should know because during the past two decades we’ve been helping them find a dealer for their best opportunity at approved auto loans. We even designed our website so that applicants could gain an understanding of such issues as repossession as well as today’s topic, ignoring those so-called shortcuts to credit repair and better credit scores.
Quick credit repair
For credit-challenged consumers exiting a bankruptcy, or even those trying to improve their credit rating, the idea of being able to quickly boost FICO scores can be very appealing, to say the least.
For this very reason, a number of companies will promise to cure anyone’s credit woes almost immediately. During the process, a few will show you how to create a new identity for yourself. But this solution will only get you into trouble.
It’s called file segregation and here’s how it works: A credit repair agency will sends out letters targeted to people with a recently completed bankruptcy. These letters typically explain that due to the bankruptcy they’ll be unable to get a credit card, personal loan or most other types of credit for 10 years (not true).
To prevent this from happening, the agency will, for a fee, show them how to hide the bankruptcy by creating a new identity that can then be used to apply for new credit accounts. To accomplish this, they direct people to apply for an Employer Identification Number from the IRS.
While the EIN may look like a social security number it’s actually an identifier issued so that businesses can report their financial information to both the IRS and the Social Security Administration.
After receiving an EIN, the credit repair company then directs their clients to use it instead of a social security number when applying for credit. By doing this it separates (segregates) any old information from the new credit file they’re trying to establish.
What the credit repair company doesn’t tell clients is that it’s a crime to obtain an EIN for personal identification. Using a phone or the mail to apply for one means you could also be charged with mail or wire fraud. In many states this practice is also considered a civil offense.
As we see it
Beware of any company that promises a quick and easy road to credit repair. Follow your instincts. If it sounds too good to be true, it usually is.
Incidentally, as part of the Credit Repair Organizations Act it’s even illegal for a company to charge you for credit repair until they’ve actually performed the service.
One more thing: at Auto Credit Express our specialty is placing applicants with dealers for their best chance at approved auto loans.
So if you’re serious about getting your car credit back on track, you can begin by filling out our online auto loans application now.