Credit Repair Scams: File Segregation and EIN

One old credit repair scam that is making the rounds again is the concept of file segregation. Not only does this type of credit repair not work, it is actually illegal and you could face severe fines as well as jail time for attempted fraud. So how can you recognize a file segregation scam? Your first clue should be any credit repair service that promises to give you a “fresh start” or an entirely new credit history. Another clue is any credit repair service that asks you to apply for an Employer Identification Number, or EIN.

Having an EIN is not illegal in and of itself. However, when used in conjunction with unscrupulous credit repair tactics, establishing an EIN may be considered an attempt at fraud. This is because traditionally, an EIN is used to establish credit for a business entity. Misrepresenting yourself as a business, combined with any attempts to segregate your credit history such as using a different mailing address from the one on your personal credit history, can be considered fraud. Companies that claim you can get a clean credit history through file segregation are promoting practices that are known to be illegal. Above and beyond that, this type of strategy will have no effect on your actual credit rating and will not help your ability to obtain credit in the future.

Companies who promote file segregation and EIN are counting on your ignorance of how credit actually works. The EIN may not be linked to your poor personal credit history, however, a lack of negative credit history does not help your chances at obtaining credit when there is no credit history whatsoever. This “blank slate” will also have difficulty obtaining credit from most businesses and banks due to the fact that a new business with no credit history is not a good credit risk. Establishing credit for your new identity is fraught with unnecessary risks, and if you use the EIN legally, your old credit history will be tied to this new number as well. In short, file segregation and applying for an EIN only wastes time, and leaves you vulnerable to criminal fraud charges. Never deal with any company that offers this type of service -- it is always a scam.

If you are looking for credit repair solution, steer clear of any file segregation and EIN “solutions” you may be offered. Instead, focus on repairing your personal credit history through proven methods that actually work. By disputing incorrect items on your own credit report as well as other legal methods, you can improve your credit without taking the risk of committing fraud through deception. If you're unsure of how to repair your credit on your own, make certain that any credit or company you deal with is reputable and has proven results.

Labels: credit repair, credit repair scams, credit repair service