The TRUTH About Creating An Alternate Credit File

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-by Jay Peters

(C) Copyright Jay Peters
All Rights Reserved

http://vur.me/GetItNow/CreditSecrets
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Dear Entrepreneur,

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.

NEXT TIME:
"Five Things Every Married Person Should
Know BEFORE Signing Any Credit
Application!"
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Jay Peters is the founder of Consumer
Publishing Group which publishes the
Credit Secrets Bible (in print since
1994).

For more information on the CREDIT
SECRETS BIBLE you may visit:

http://vur.me/GetItNow/CreditSecrets
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