The Truth About Creating An Alternate Credit File

What if I told you there was a way you could solve all your bad credit problems overnight by creating a brand new credit file in 24hrs - would you be interested? And what if I told you this program was 100% legal and even backed by the federal government - would that sound too good to be true?

Well... you're right. It is too good to be true but these types of ads are now surfacing again after the Federal Trade Commission launched "Operation New ID Bad Idea" over 8 years ago. This operation targeted (and took down) over 50 credit repair organizations and companies selling consumers both pamphlets and services giving them a brand new credit file under the pretense it was 100% legal and in some cases even claimed it to be a "government sponsored" program!

The con was simple. Companies would target consumers with bad credit and offer to create a brand new credit file for them by substituting an Employer Identification Number (EIN) for their Social Security Number (SSN) along with a new address. EIN's were obtained from the Internal Revenue Service on behalf of the consumer. With the EIN and a new address the companies would either have the consumer apply for credit with the "new information" or the company would apply for them. When the creditor would run the application it would automatically create a new credit file because the computer would be unable to find the consumer in the database due to the new address and SSN.

While there is some dispute among privacy experts as to whether or not this is legal, the FTC's actions at the time were not up for debate. Companies were advertising and luring in consumers in order to have them falsify credit applications by providing new information such as their address and SSN in order to obtain credit. This was a direct violation of the Truth in Lending Act (TILA) and worse yet, the companies were advertising to consumers that this was 100% legal and in some cases claiming it was a government sponsored program. As you'll hear me say often "In reality, nothing could be further from the truth".

Privacy experts will argue that using an EIN or 9 digit PIN (simply a made up number) in place of ones' SSN is completely legal since creditors are on shaky ground asking for your SSN in the first place. In regards to the truth in lending act they will argue that one has to exhibit "an intent to defraud" a creditor. My question "Is concealing ones' adverse credit history intent in itself?" While I am not an Attorney on the matter of credit law I can conclude that if a consumer was to create an alternate credit file using the EIN or PIN method they better be darn sure they never have a problem paying their bills. If they do, they most likely would find themselves in a courtroom with a case involving credit fraud. Which brings me to my next topic.

How To Create An Alternate Credit File Legally

Most consumers are unaware that in addition to consumer credit reports, both Experian and Equifax own and operate business credit reporting services. By creating a business credit profile a consumer can now create an alternate credit file legally. While some creditors such as residential utility companies will not allow you to use business credit in place of personal credit, we have had numerous clients who have successfully used business credit to obtain credit cards, automotive leases and loans. This technique (although controversial) can be very effective when done properly.

The basics of building business credit involve:

1.) Setting up the proper structure for your business (i.e. Corporation, LLC, etc.).

2.) Obtaining an EIN as well as a DUNS number (Dunn and Bradstreet).

3.) Borrow and/or buy products and services from vendors who reports to business credit reporting agencies such as Experian, Equifax and Dunn & Bradstreet. While building business credit requires time just like personal credit, don't get discouraged. Remember, when you set out to begin building your business credit you are starting with a clean slate. This is when it becomes imperative that one learn from the mistakes of their past. Remember, in the credit world those who do not learn from their past are (inevitably) doomed to repeat it.

by Sean Matteson
The "CREDIT SECRETS BIBLE" has been in print since 1994 and is published by Consumer Publishing Group. For more information on the "Credit Secrets Bible" you may visit: http://www.credit-secrets-bible.net

Common Credit Score Myths

A lot of credit score myths about fico score ratings get spread around and some of them are just outdated information. Sometimes even lenders can give you the wrong advice and it can get confusing. But the bottom line is bad information can cost you money no matter who you get it from.

Fico score ratings are used for most mortgage lending, which means, you need to know what will hurt or help your credit score points. To make it clear, here are some of the most common credit score myths.

* Checking your credit report will hurt your credit score

Checking your own credit report and credit score counts as a soft inquiry and does not go against your score. However, if anyone else like a lender or credit card company is checking your credit report, this is considered a hard inquiry and will generally knock off about 5 credit score points.

The credit score rating system treats multiple inquiries in a 14-day period as just one inquiry. The system ignores all inquiries made within 30 days prior to the day the credit score is computed. So if you want to minimize the damage from credit inquiries, shop for a loan in that short period of time.

* Closing old accounts will improve your credit report score
Sometimes even lenders will tell you to close your old and inactive accounts as a way for improving your credit report score. In most cases, closing old accounts will actually have the opposite effect with the current credit score rating system.

Canceling old credit accounts can actually lower your credit score because it makes your credit history appear shorter. If you want to reduce your levels of available credit, it's better to reduce or close new accounts instead. Applying for new credit is more likely to lower your score.

* You need to check more than just FICO score rating
If you ever hear this from anyone, consider it a red flag. All of the three major credit reporting bureaus offer FICO credit score ratings using the formula developed by Fair, Isaac. Even though each one gives the scores a different name you only need a fico score rating from the three major credit reporting bureaus.

At Equifax, the FICO score rating is called the Beacon credit score. At TransUnion, it’s called Empirica. At Experian, it's known as the Experian/Fair, Isaac Risk Model.

The reason each of the three major credit reporting bureaus will have three different scores is because they don’t all share the same data. So when checking your credit report, just make sure it comes from the three major credit reporting bureaus: Experian, Trans Union and Equifax.

Examine your credit reports from all three major credit reporting bureaus before you apply for a big loan like a mortgage. Fix any errors in all three reports before you shop for a loan because it takes time to correct your credit report.

* Credit counseling will hurt your score
The current FICO credit score rating system ignores any reference to credit counseling that may be in your file. The researchers at Fair, Isaac, the company that created the FICO credit scoring rating system, found that people getting credit counseling didn’t default on their debts any more often than anyone else.

However, any late payments you've had with creditors will hurt your credit score. Credit counseling can hurt your ability to get a loan because you probably have had trouble paying creditors.

Some lenders will back away if you are in credit counseling. Others may see it differently, but usually will charge you higher interest rates than if you had perfect credit.

The best way to improve your credit report score is paying your bills on time and paying down credit card debt. Check your credit report regularly for any errors and make sure you don't fall for these common credit score myths.

Copyright © 2005 Credit Repair Facts.com All Rights Reserved.

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Lightning Fast Credit Repair Ideas

Keep in mind that nothing in the world of consumer credit happens at a "lightning rate," but I have personally seen the following strategies implemented -- and have seen ficos pop up 40+ points in under 2 weeks. So, let's get to it:

1. Get a tri-merge of your credit report. This is one report that consists of your credit information from the 3 major credit repositories: Equifax, Experian, and TransUnion. If you must, spend the extra couple of dollars to see your actual scores -- if you don't know what your beginning scores are, how can you tell if they've improved?

2. Get a "quick sense" of your credit. If it's bad, why? This is not as hard as it seems, and you don't need to be an expert to figure it out. Some examples are collections, judgements, tax liens, bankruptcies, slow/late payments, mortgage lates, repossessions...that's the sort of thing. Figure out what's taking the biggest toll on your scores. We'll come back to this in a moment.

3. Count up your active accounts...you need at least 3. The credit agencies like a blend of accounts: revolving credit, installment, and long-term installments like a mortgage. But for now, you need at least 3 active accounts. If you don't have any open accounts, DO NOT start applying for credit cards! New lines of credit like this will actually drop-kick your scores. Instead, here's the lightning fast solution: Piggyback off of someone's good credit card. Here's how you do it: identify someone in your life -- family and/or friend -- who you trust, and most importantly, who trusts you. Tell them that you're working on improving your credit scores. Ask them if they have a credit card that meets the following criteria: at least 2 years of unblemished, never-been-late payment history; a balance that is no more than 40% of the credit limit (ie, $400 balance on a $1000 limit card). If they have a card -- or ideally, a couple of them -- that fits this bill, then you're in luck! Now, here's where the trust comes in: You're going to have them add you to this credit card. They will call their card company and ask that you be added as an authorized user of the account. Again, the trust factor is paramount! You will NOT be receiving a copy of the card in the mail; you will NOT be using the card...it's not your card. You are merely being added to the account, and in turn, this nice, credit friendly account is being added to your credit history. It will appear as a "joint account"...and the credit history -- as long as it is -- will appear on your credit report, just as if the account had been yours all along!

4. Pay down your debt! When I speak to people about their credit scores, they always want me to magically fix their scores without any effort on their part. Well, you ran up the debts, it's your responsibility to pay them down. Here's the formula: your first goal is to pay down the balance to 50% of the limit (so a $1000 limit card needs to be paid down to $500). Do this for all of your accounts before you take aim on a single account and decide to pay it off entirely. At a 50% balance, you should no longer be penalized for out of control balances. Second step: knock those balances down to 30% of the limit. If you do this, your scores will really soar! It's a fact that the credit agencies reward you with positive points when you balances are at 30% or less.

5. Finally, DO NOT CLOSE YOUR CREDIT CARD ACCOUNTS ONCE YOU'VE PAID THEM. This is a huge mistake that I see committed again and again. If you can get your balance down to zero, throw yourself a party (pay with cash, not credit), but don't close the accounts. Closing accounts hurts your credit because it's bridge you're burning: you'll never receive any more good credit points from a closed account.

As someone who helps people through credit repair situations daily, take it from me...these things work. There is hope! Don't give up!

Tips On How To Repair Your Credit Legally, Quickly And Easily

For whatever reason, whether it is bankruptcy, mounting debts getting out of control, or there are erroneous reports on your credit report, your credit rating is too low to get a loan of any kind. Though a bankruptcy can remain on your credit report for up to ten years, mounting debt seems impossible to bring down and erroneous reports seem to be cemented to your credit report, there is a way to repair your credit legally.

Actually, rebuild would be a better term but there is some repair to it, especially in the case of erroneously reported items on your report. The best thing to do would be to hire an attorney who is familiar with the credit laws but not everyone can afford the legal fees involved. Though it will take a lot of effort, you can repair your credit yourself. Below are some tips on how to repair your own credit.

1. Don't buy into the 'create a new credit file' scam. This is illegal and will land you in more trouble than you want. Creating a new credit file is credit fraud. Some people will try to sell this idea as a way to get money from desperate people looking for a way out.
2. Become familiar with the Fair Credit Reporting Act. This will help you determine if there could be errors on your credit report and tell you what the credit card companies and loan companies can and cannot do with regard to your debts. It can also help you avoid future problems.
3. Get copies of your credit report from each of the three major credit reporting bureaus. Go over them carefully to make sure everything is correct. If anything seems to be incorrect, get a statement regarding anything you think is reported in error. Gather any proof you can as to why it is an error.
4. Dispute any bad reports you disagree with in writing to the credit bureau on plain paper and include any notarized and/or official documents of proof that the item reported is in error. For multiple items, send separate letters of dispute as only the first one will really be looked at if they are all sent together. It is also a good idea to not send in your dispute letters during a high volume time of year, such as November through January, if it can be avoided. Processing your dispute will take considerably longer during that time.
5. Make sure you pay all your regular monthly bills on time or early every month. This will help raise your credit rating enough to begin taking out small loans that you can afford to repay quickly.
6. Be consistent in repaying any money borrowed from any institution that reports to the credit bureaus. The better you are about paying off these debts quickly, the quicker your credit rating will go up.

Eventually, you will be able to get a low limit credit card or even a car loan. If you are making regular payments on these, you will soon be able to get a larger loan, such as a home loan, at a better interest rate than would be possible if you just waited out the statute of limitations on your bad credit. So, if your are willing to work hard at it, you can repair your credit yourself rather than let the credit reports determine whether you can buy a house or car in two or three years instead of ten.

For information on obtaining your credit report try visiting , http://www.free-online-instant-credit-report.info, a popular website that provides credit repair tips, advice, and resources to include information on resolving a credit dispute, credit repair programs and how using a secured credit card for credit report can increase your financial stability.

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