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Credit Repair Scams - File Segregation

When your credit score is screaming for a repair you may become so desperate that you select to use the services of a credit repair company without doing the necessary research and falling in one of the many traps.

One of them is the so called file segregation. This credit repair scam includes the application for a new Social Security Number. Many companies have advertised this tactic on all of the available media by stating that you have the right to apply for a new number.

This tactic is based on the false reasoning that once you acquire a new social security number, you will obtain a completely new credit history. However, this is not true. Additionally, instead of a victim of a scam you become a volunteer in it by violating some of the federal legislations. The result can range from a fine to a prison sentence.

How This Credit Repair Scam Works?

The client of a file segregation company is asked to apply for EIN (Employer Identification Number). This number can be used instead of a Social Security number during the process of applying for a credit. This is done in order to set a new credit file. However, most people fail to realize that their old debts will be still displayed. The segregation operators base their scam on obtaining a new credit line through the EIN, while the name and address of the recipient are a little bit changed from the original ones.

As a result, the client becomes an accomplice of the segregation operator in the infringement of the federal laws. The change in the identifications of a client for the purpose of hiding credit details is against the regulations of the CROA. Companies that give advice for this or help consumers do it break the law. Additionally, consumers that follow such advices are not considered as victims.

The law bars the making of inaccurate statements when applying for a credit or loan. Additionally, it doesn't allow the misrepresentation of Social Security numbers. If untrue pretences are used for the acquisition of an EIN you are again breaking the law.

File segregation is viewed as a civil fraud in most of the US states. The use of the phone or postal services for credit application by means of false data is also considered to be a type of fraud.

So, carefully consider the options you have for repairing your credit in order not to end up in greater trouble.

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