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Credit File Segregation
Credit File
Segregation, (known as 'Getting a New Credit File') is the process of obtaining
a separate identification number, usually a federally issued EIN (Employer
Identification Number) or TIN (Taxpayer Identification Number), and using it in
place of your Social Security number when applying for credit. This is intended
to shield an applicant's true credit history from an inquiring agency. So far,
this may sound like a reasonable idea.
So, what's the credit scam?
The are many,
many sites and scammers offering File Segregation Services, and each in turn is
shut down by government investigators, but not before many people fall prey to
the site operators first. What these operations are trying to do is to give you
a "new identity". You pay their fee and sign up for their services. Then you are
directed to apply for an Employer Identification Number. Sometimes, they even
provide you the forms and some instructions on how to fill them out.
When you get
the EIN, you will be told to use that instead of your Social Security number
when you apply for credit. They'll probably also tell you to use a new mailing
address.
OK, so what's wrong with "File Segregation"?
Basically,
some of the acts to required accomplish this new credit file are ILLEGAL!
First, you are
applying for an EIN, when in fact you have no intentions of using the number
provided by the IRS for the intended purposes. Since the form requires you to
sign it under penalties of perjury, well, you can see the problem there. You can
view the application form
Here.
Second, under
the Federal Trade Commission's Credit Repair Act, it may be a felony to use a
false identification number.
Third, if you
use any means of interstate commerce, such as the mails, telephone, or fax, to
submit an application for credit, you can also be prosecuted for mail or
telecommunications fraud.
And finally,
if a creditor is damaged (they lose money) because you defaulted on a loan
obtained by an application with false statements, they can sue you for fraud as
well.
Though it may
be tempting and a quick fix for your present credit problems, it could cost you
thousands of dollars and maybe even jail or prison time. And while you will have
a second file for a while, it will not take very long for the credit bureaus to
catch on. This scam has been around long enough that the credit bureaus are
quite familiar with it, as soon as they detect it, they will merge the real and
the "new" files, with an additional notation that you are using a false SSN.
