Illegal credit repair
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What exactly is illegal credit repair? I’m trying to repair my bad credit, so I’ve done some reading about bad credit repair and restoration. I run into this term but I’m not sure what exactly it means.
Thank you
Re: Illegal credit repair
The Credit Repair Organizations Act (CROA) was put in place to protect regulate the credit restoration business and protect consumers against unscrupulous practices of bad credit repair by organizations claiming to help you for a fee.
The first thing you need to understand is that correctly reported negative information CANNOT be legally removed from your credit report. Even if you pay your late payments, defaults, charge offs, judgments etc – that information remains on your credit report until it ages away (See this for more information).
This creates a problem to people or companies seeking for instant credit report repair. As a work around – these companies developed a few illegal credit repair methods.
The most common technique is to create a new identity, so that your bad information can no longer be related to you. They advise customers to ask for an Employer Identification Number from the IRS in false pretense and then use it instead of their SSN when they apply for credit.
Other illegal credit repair techniques involve disputing all the negative information on your file, regardless of its accuracy or timeliness, or simply lying about your credit history when you apply for new credit.
All these methods – lying on a loan or credit application, misrepresenting your Social Security Number and obtaining an Employer Identification Number from the Internal Revenue Service under false pretenses are considered a federal crime and could very well lead to a prosecution.
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