Erase Bad Credit: What strategies to avoid
You may have heard of many different strategies of credit repair. Some are perfectly legal, while others should be avoided at all costs. If you want to know about strategies that are best left alone, then you will want to read this article. We will be discussing two strategies that you should avoid when trying to erase bad credit.
File Segregation
The first method of illegal credit repair is file segregation. You may have seen advertisements on the internet of companies who claim that they can get you a new credit file. They typically will charge you several thousand dollars for what they promise is a completely legal strategy that they will implement on your behalf.
Then, they ask you to apply for an Employer Identification Number (EIN) from the IRS. Once you have this, they have you apply for credit using a different address from your own and using the EIN as your social security number.
This strategy is completely illegal regardless of what these companies say. It is not legal to apply for an EIN for any purpose other than a legitimate business practice. Additionally, it is fraud you portray an EIN as a Social Security Number on a credit application.
Illegal Piggybacking
There has been a lot of confusion about piggybacking since FICO 08 rolled out in the summer of 2009. The changes in the piggybacking laws were brought on by unscrupulous credit repair companies selling authorized user status to their clients. Basically the scam involved paying someone you had never met to add you to their credit card.
Under FICO 08, the only people that can add you to their credit card and have your credit benefit from it are a parent or spouse. Paying someone or even getting a friend to add you will no longer benefit your credit score and should be avoided when attempting credit repair.
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