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
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
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
Next: "Five Things Every Married Person Should Know BEFORE Signing Any Credit Application!"
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," click here.