Watch out for Credit Repair Scams
Burbank, CA (PRWEB) February 1, 2005 -- National Legal Debt Centers, Inc. (2/1/05) www.nldc.us There are deceptive ads on the TV, radio and internet claiming that for a small fee you can legally get rid of your credit problems. With language about the "legal forms from the federal government" and your one-time "right" to apply for a "new Social Security number" these advertisements try hard to convince you that their system, called "file segregation," is the secret to a fresh start. The problem is, they're false and potentially illegal. (For the real deal, check out: http://www.creditchampion.com/?Document=Credit+Reports)
File Segregation Creates a False Identity
When you sign up for one of these services, you will be instructed to apply for an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). EINs resemble Social Security numbers, and are usually used by businesses to report financial information to government agencies. Once you have this "new" number, the 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.
Since your credit file is tied to your name and Social Security number, using this new number and information supposedly allows you to create a brand new credit file. Then creditors requesting a credit report with your name and new number will not see your previous file with all the negative information it contains.
These credit repair services will most likely offer 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, since after all, you're starting from scratch.
Per the FTC, Segregating Your File Violates the Law
Unlike other credit repair scams that may make you the victim of fraud, this scam makes you a perpetrator of fraud against the government. If you try file segregation, you could face fines or even a prison sentence. Several aspects of the credit repair service's program could lead you to commit fraud. It is a federal crime to:
· Make false statements on a loan or credit application.
· Misrepresent your Social Security number.
· Obtain an EIN under false pretences.
In addition, if you were to use the telephone or the postal system to apply for credit and provide false information, then you could be charged with mail or wire fraud, too. And, file segregation likely would constitute civil fraud in many states.
Contact: National Legal Debt Centers, Inc.: www.nldc.us
References:
Mortgage and Credit Information
http://www.creditchampion.com/
http://www.creditchampion.com/?Document=Credit+Reports
Debt Reduction Alternatives
http://www.nldc.us/debtoptions.html
Debt Elimination Scams... Fraud Warning
http://credit.about.com/od/shamsandscams/a/082504.htm
'File Segregation': New ID Is a Bad Idea
http://www.ftc.gov/bcp/conline/pubs/credit/creditid.htm
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