FEATURE ARTICLE: What’s Behind Ads for a New Credit Identity? It
Could Be ID Theft Involving Children’s Social Security Numbers
If your credit is less than golden, you’ve probably seen pitches from companies promising a fresh start. Some claim you can get a “new credit identity” by applying for credit with a nine-digit number they sell you, rather than with your own Social Security number that you’ve used for years.
The Federal Trade Commission, the nation’s consumer protection agency, says don’t take the bait. The scheme often involves Social Security numbers stolen from children. Not only won’t you get credit, but you could face fines or prison.
The Pitch: A “New Credit Identity”
How do these fraudsters operate? They advertise in the classifieds, on radio and TV, and on the Internet. If you pay them a fee, they promise to help you hide a bad credit history or a bankruptcy. And after you pay them, they send you a nine-digit number that looks like a Social Security number. They may call it a CPN — a credit profile number or a credit privacy number. They’ll tell you to apply for credit using the CPN, rather than your own Social Security number. Some lie and tell you the scheme is legal.
Here’s what they don’t tell you: In many cases, they’re selling you someone else’s Social Security number — often one stolen from a child. Using a stolen Social Security number to apply for a loan on another person’s good credit record is identity theft. And by encouraging you to use the stolen number as your own, the con artists have involved you in their scam.
It’s a crime to make a false statement on a credit or loan application. That includes misrepresenting your Social Security number. If you use the number they sell you, you could face criminal prosecution or civil fraud charges.
As a result, the fraudsters have pulled off a double whammy: They’ve created identity theft headaches for the families of children whose numbers they stole; and by selling you a stolen number to use on credit or loan applications, they’ve put you smack in the middle of a federal crime.
Spotting the Signs of Other Credit Repair Scams
The CPN ploy is the latest lie promising a quick fix to poor credit. The truth is that only time and sticking to a personal debt repayment plan will improve your credit report.
Here are some telltale signs of a credit repair fraud:
- companies that insist you pay them before they do any work on your behalf;
- companies that tell you not to contact the credit reporting companies directly;
- companies that tell you to dispute everything in your credit report — even information you know is accurate;
- companies that tell you to give false information on your applications for credit or a loan;
- companies that don’t take the time to spell out your legal rights when they tell you how their business operates or what they say they can do for you.
Your Rights Under the Law
The Credit Repair Organization Act (CROA) makes it illegal for credit repair companies to make false statements about what they can do for you and to charge you until after they’ve performed their services. The law, which is enforced by the FTC, requires credit repair companies to explain your legal rights in a written contract that also details the services they’ll perform, how long it will take to get results, the total cost, and any guarantees. Under the law, these contracts must explain that you have three days to cancel without any charge.
What if a credit repair company you hired doesn’t live up to its promises? You have the right to sue them in federal court for your actual losses or for what you paid them, whichever is more. You also can seek punitive damages — money to punish the company for violating the law. The law allows class actions, too, where people join together in one lawsuit. If you win, the other side has to pay your attorney’s fees.
The CROA is a federal law. Many states also have laws regulating credit repair companies. If you have a problem with a credit repair company, report it to your local consumer affairs office or your state attorney general (AG). Many AGs have toll-free consumer hotlines or let you file a complaint online. Check the blue pages of the phone book or your state website.
You also can file a complaint with the Federal Trade Commission. Although the FTC can’t resolve individual credit disputes, it can take action against a company if there’s a pattern of possible law violations. File a complaint online at ftc.gov or call 1-877-FTC-HELP.
Need information about legitimate ways to deal with debt? Visit ftc.gov/moneymatters.
MONEY SAVING TIP: Mind the unit price
Many grocery store tags will tell you how much an item costs per ounce, per pound or by some other unit of measure. Comparison-shop by unit price and save.
For example, a pack of 40 diapers at our local drug store cost $13, or 33 cents per diaper. A box of 144 diapers cost $35, or 24 cents per diaper. A difference of 9 cents may not seem like much, but when you change a diaper six to eight times each day, that amounts to a savings of $16 to $22 per month.
One caveat: Don’t buy in bulk if you won’t use it all — otherwise, you wasted your money, no matter how good a deal it was.
DID YOU KNOW…Maxing out a single credit card can hurt your credit?
As MainStreet has previously reported, it’s never a good idea to bump up against your overall credit limit because your credit utilization ration will appear sky-high. However, according to Chris Mettler, founder of CompareCards.com, maxing out a single card can negatively influence your credit score as well. The impact this will have on your credit will depend on the rest of your credit profile. As such, if you do have a particular card that’s bumping up against the limit, you will want to pay that down as soon as possible.
“The recommended balance to carry is 30% or lower of your available credit line,” Mettler says.