If you have a bad credit rating, a company promoting a “new credit identity” that gives you a fresh start on your credit history may seem like the answer to all your credit problems. But don’t believe them.

The fact is these companies are credit repair scams. For a fee, they will provide you with what they call a “credit profile number” or “credit privacy number.” These nine-digit numbers look like Social Security Numbers. And, in fact, they are often stolen Social Security Numbers, usually taken from children.  

Or, these companies may tell you to apply for an Employer Identification Number (EIN) from IRS. EINs are unique numbers the IRS gives to businesses for tax reporting purposes. These companies may even instruct you to lie on the application stating you have a legal business.

Once you have obtained your new credit profile number or EIN, these companies will tell you to use this new number to apply for credit instead of using your real Social Security Number.

However, what you may not know is by using this fraudulently obtained Social Security Number or EIN, you are committing a federal crime. And since it is a federal crime, you can be arrested and face steep fines or possible jail time.

So how can you tell whether the company you’re dealing with is, in fact, a credit repair scam? These companies will often:

• Demand payment upfront before they perform any services.
• Tell you not to contact or respond to the credit reporting agencies.
• Not explain your legal rights.
• Tell you to dispute accurate information on your credit report.
• Tell you to provide inaccurate information to credit reporting agencies or on credit or loan applications.
• Not provide you with a copy of the contract to read before you’re asked to sign it.
• Ask you to sign a form waiving your rights under the Credit Repair Organizations Act.

If you suspect a company is committing credit repair fraud, report it to your state Attorney General. Or, you can file a complaint with the Federal Trade Commission.

Just remember, if you really want to improve your credit score, it takes time and real effort on your part.

Once you’ve improved your credit and you’re ready to purchase a home, contact Grandview Lending. Our mortgage specialists can guide you through the process and help you find a loan that best fits your specific requirements.