Your credit is lousy. Maybe you just declared bankruptcy or gone into foreclosure. You're desperate and depressed. Suddenly, you find the answer to your prayers. It may come as an add on TV. Or it might show up as a letter in your mailbox. But there it is - a chance to start over:
Erase Your Credit!
Get a New - CLEAN - Credit File in 30 Days!
Get a Fresh Start With a New Credit ID!
Whatever the words, the promise is the same. For a fee (of course) you will get a new credit ID number which you can then use to build a whole, new credit profile. Use this new number when applying for credit and no one will ever see your old credit problems. And, best of all, this is totally legal and sanctioned by the government!
It sounds wonderful and, like most things that sound too good to be true, this one is a lie. It's a scam to move what little money you have left, out of your pocket and into those of the "credit repair" company. The difference between this and other scams is that this one is also illegal and, by following their instructions, you could end up in jail.
The scam is based on a process called "file segregation". You will be told how to file for a "new" social security number. In fact, what you will be doing is filing for an Employer Identification Number (EIN). EIN's look like social security numbers, but they are used by businesses to report financial information to the IRS. Your helpful "credit counselor" will recommend that you use a different mailing address on your application, and suggest you come up with some credit references ("not to worry if the addess and references are fake, it's just a formality").
Once you get your EIN, you will be instructed to use it (and the false address and credit references) to apply for new credit cards or loans. You'll be cautioned that it may take 60-90 days before your new credit "really begins to work", so be sure to pay all your new bills on time.
What you will NOT be told is that, by following their advice, you may be committing fraud. It is a federal crime to:
Misrepresent your social security number;
Obtain a EIN under false pretenses;
Make false statements on a loan or credit application.
If you use the mail or phone to apply for credit and provide false information, you could also be charged with mail or wire fraud. And if that were not enough, in most states, you could also be accused of civil fraud.
The bottom line is that there is no quick and easy way to "start over". If you want to repair your credit history, start by reading Your Credit Rating - Know the Score and Help During Hard Times.
Many people are looking for a quick, easy way to repair their credit. But it takes time and work. Don't fall for this scam. Not only will you be throwing away your money, you may end up in jail.
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