Credit Repair the Wrong Wayby Steve Cypher on Thursday, January 17th, 2013
Consumers with poor credit should realize that there are no shortcuts on the road to repairing their credit because fraudsters are out there ready to take their money if they think there is
If it sounds too good to be true
Car buyers that are facing credit issues often ask us if there is a faster way, other than bad credit auto loans, that they can repair their car credit.
Here at Auto Credit Express the answer we give them is typically not the one they want to hear. We know why this is because during the past twenty years we’ve been helping these kinds of consumers find the right kind of new car dealers that can offer them their best opportunities for approved car loans.
In addition, our website is designed so that applicants can research topics relating to repossession as well as what we’ll be touching on today: understanding why many of those so-called shortcuts to credit repair and better credit scores can get you into a whole lot of hot water.
Quick credit repair
For credit-challenged buyers trying to improve their auto credit or even those who have recently completed a personal bankruptcy, we can see how the idea of being able to quickly boost credit scores can be very appealing at the very least.
Knowing this is the case, a number of businesses have been known to promise they’ll cure anyone’s credit woes almost immediately. During the process, a few of them will probably show consumers how they can create a new identity for themselves. But this solution will only lead to trouble.
The process is called file segregation and this is one way it works: A credit repair agency will send out letters targeted to people with a recently completed bankruptcy. These letters typically explain that due to the bankruptcy they’ve just completed they’ll be unable to get a credit card, personal loan or most any other type of credit for 10 years (something that is patently untrue).
To prevent this from occurring, the agency will, for a fee, show these people how they hide their bankruptcy by creating a new identity for themselves.
This new identity can then be used to apply for new credit accounts. To accomplish this, they specifically direct people to apply for an Employer Identification Number from the Internal Revenue Service.
While an EIN looks like a social security number it’s actually an identifier that is issued to businesses so they can report their financial information to both the IRS and the Social Security Administration.
Once they receive 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 will separate (segregate) any of their old credit information from the new credit file they will establish.
What the credit repair company doesn’t tell their clients is that it’s a crime to obtain an EIN for personal identification. Not only that, but using a phone or the mail to apply for one means that the applicant could also be charged with mail or wire fraud. In many states this practice is also considered a civil offense.
The Bottom Line
Consumers with credit problems should beware of any company that promises a quick and easy road to credit repair. The best advice is to follow your instincts. If something sounds too good to be true, it usually is.
Incidentally, as part of the Credit Repair Organizations Act it is illegal for a company to charge you for credit repair until they’ve actually performed the service.
One more thing you should be aware of: Auto Credit Express specializes in matching applicants with auto credit issues to dealers that can offer them their best chances at car loan approvals.
So if you’re ready to begin that process, you can start now by filling out our online car loans application.