My Real Estate Tips

Recently my friends at Liberty Mortgage Company sent me an email alert regarding the latest scams in the credit repair market.  The mortgage company receives applications every day that have some credit issues that could block the path to home ownership.  Many of the people they talk with are under the impression that their credit issues are being repaired.  Unfortunately, the applicants often have fallen for one of the many credit repair scams that set their traps for well meaning home buyers with a few credit problems. 

Mortgage loan qualification requirements are stricter today than in the past – FHA / VA and Conventional Home Loan sources are requiring ever higher FICO scores — so the average applicant may need to improve their credit report before they can qualify for a home loan.  With the pent up demand for housing beginning to show, it makes a very ripe market for scammers. 

Credit Report Credit History

Most popular scams promise to wipe your credit report clean of all the negative information.  They usually charge an up front fee, sometimes as much as $1,500 for their service.  Often all the scammers will do is dispute all the negative information on your credit report.  This is something you can do on your own for free.

Federal law requires the credit reporting agencies to investigate all disputes within 30 days.  If the agency can not confirm the negative information it must be removed from the report, however if the information is confirmed, it does stay on the report.  Many creditors do not have the manpower or resources to confirm or deny negative information back to the agency within the time limit, so the information often gets removed, even if it turns out to be true.

Another “We will fix it” scam for a fee is to tell you that they will get you a new social security number.  The idea is with a new number most credit agencies would have to start a new file under that number with your name and it wouldn’t have the negative information that may have been reported under your old SS number.

The truth is, the Social Security Administration almost never agrees to assign a new SS number to an individual who already has a file and number.  What these “credit repair” scammers are doing is filing with the IRS for an EIN (Employer Identification Number) under your name.  An EIN is a nine-digit number that looks like a social security number, but it’s actually a number assigned to a business.  This number is used by the IRS to identify companies for tax payment purposes. 

If you fall for this one, the consequences are far reaching.  By using an EIN as your SS number, you change how your income is reported to the IRS.  You’ll find it’s a big problem when you retire and the Social Security Administration has no record of your work history.  In addition you may find yourself accused of conspiring to commit fraud with possible jail time in your future.  So, be informed and don’t be a victim. 

If you want to improve your credit report and FICO score, try some of the methods I recommended in an earlier article,  Oh FICO, My FICO.  If you would like more information and instructions, plus samples of dispute letters and more, go to Credit Score Maximizer for a proven system for improving your credit – it works.

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