The new SS# or EIN Scam
What happens is you pay the credit doctors several hundred dollars, and they tell you what to do. Here's where the felony part comes in. Part of their credit repair scam is to substitute your Social Security number with a 9 digit federally issued Employer Identification Number (EIN), or a Taxpayer ID# that you are to obtain. By doing this, you are illegally creating a new persona, which you use to get credit cards and loans. Trying to fix bad credit with your federal numbers like that is a felony, and if you used the internet or phone lines, you could be charged with racketeering under the RICO act, which law enforcement agencies love to abuse. Besides, credit bureaus are getting much better at catching these red flags because they are smarter than you and the credit doctors. But many times the credit doctors lie to you. As the FTC warns, credit doctors tell you “It’s 100% LEGAL...,” or “It’s not only legal, it’s your right.”

The First Step To Your Credit Repair

By now you should have your credit report with your credit score and probably found an error or legitimate black marks, also known as "dings". If you don't have your credit report, here's a few sites to try.

In reviewing your credit report you may have come across inaccuracies or black marks on your payment history. There may be an error on your report which is causing you a bad credit rating even though you do not deserve it. On the other hand your bad credit rating might be accurate. Either way there are actions that you can take to repair your credit. This chapter will first discuss how to fix bad credit errors, typos, and omissions on your credit report.

Many people are scared because they don't know what's on their credit report or how it will affect their chances for a good deal. Car dealers use this to their advantage because almost everyone has a bad mark on their report. How often does this happen: You get an erroneous notice from a credit card or bank saying "we never got your check". You call them up, find out it's their mistake, no problem. But many people are shocked to find out this error made it onto their credit report! Here are some other scenarios that can put black marks on your credit report without you knowing it:

• You go through a divorce and your spouse has spent your credit cards up to the limit and left you holding the bag.
• An unpaid bill from your careless college years can keep you from a loan until it is fixed.
• You moved out of an apartment and the electric company never sent you a bill for your last month there. Now you have a late fee charge off on your credit report and it is keeping you from getting a credit card.
• A creditor fraudulently places a black mark on your credit report.
• A Bill paying service you are using "forgets" to send in your payment.
• A contractor you hired places a black mark on your credit history because you refused to pay him for unfinished or shoddy work.
• You bounced or over drafted a check in your checking account.
• You were late paying your credit card payment.

Fix Bad Credit Report Yourself. Credit repair made easy:

Fresh Start: The authoritative guide to consumer credit repair If you have credit problems, you keep getting rejected for credit, or you have not established credit, you must get this easy to read credit repair Fresh Start book from Horizons Unlimited. We cannot say enough good things about Fresh Start, the best debt resource we've seen, covering more topics related to your debt than anyone. It walks you through each of the remedies available to you to fix bad credit. Forget credit repair services who scam you out of $600 or more for credit repair, this book shows you how to fix bad credit yourself. There's great step by step tips on analyzing your credit report, disputing bad marks with credit bureaus, negotiating tips, common mistakes, laws that work in your favor, well written sample dispute letters, credit bureau phone numbers, web sites, and addresses, settling bad debts AND getting the creditor to remove them from your file. There's tips for government student loan defaults, divorce & credit, bankruptcy, judgments, old delinquent accounts, credit card fraud, bad credit repair. This book is available from them as a CD ROM, as a book, or as an instant electronic download. Order the download, you can start immediately and it's searcheable.

Tricks of the credit repair services (credit doctors)
There is NO way to simply erase bad credit. Most expensive credit repair services (many who can charge hundreds of dollars) are nothing but scams that prey on those down on their luck with promises of making your bad history go away. We think you should avoid credit doctors. They just charge you $500-$1000 to fix bad credit that you can do for yourself for free. But the harsh law of credit physics is hard to beat. If a black mark on your credit history is correct, not a person alive can remove it. But there are a few tricks to that credit repair services use. One friend of ours was at a credit doctor's office, ready sign an $800 check over to them, when he got uneasy about the fact that the salesman seemed to be over hyping their ability and financial benefits of their credit repair service. He walked out, but many others are not so lucky.

Credit Doctor Trick #1: Credit repair services inundate the credit bureau, disputing all the bad marks on your credit report in the hope of bogging down the system. Credit repair services bank on the bureau being so busy answering all their frivolous disputes within 30 days, that they will not finish reviewing all of them and they'll default on the 30 day limit. By law, if a credit bureau does not respond to requests within 30 days they must remove the disputed items from your credit report. You can do a better credit repair job yourself for less money than a credit repair service would charge you. The credit bureaus can quickly determine if the bad marks on your credit report are valid. Also, credit bureaus have gotten wise to the scheming of credit doctors and are allowed to refuse or ignore "frivolous requests" from credit repair services. These requests are the ones where credit repair services buckshot the credit bureau, disputing every item on your report. Because of this, credit repair services have become much less effective than they used to be. A Credit Doctor's chances of success are no better than yours if you are armed with the information we give you here.

Credit Doctor Trick #2: This is the most successful method. Do it yourself and contact the creditor personally, bypassing the credit bureau. The credit bureau cannot remove valid bad marks off your record unless told to do so by the creditor who put it there. So go right to the source. Erroneous bad marks on your credit report should be easily removed with a simple phone call to the creditor. Others require some credit repair tricks. You must always be calm, never aggressive, don't be angry, you will portray the part of a thankful, distressed client in need, and the service representative you are talking to is the person who can help. Many times they will work hard to help you too. Even if you had been late paying a bill years before, you may be able to convince them to remove the bad mark on your credit report. There may have been mitigating circumstances like you never received the bill, and you can point out that you did pay the bill when you found out it was due. But one thing is for sure, if you don't ask for it, they won't do it, so a 5 minute phone call is worth it. We've done this before with test cases and it does work. Don't be afraid of getting "No" for an answer, that does not mean you lost. Supposing they had written off a charge on your account in the past. You can negotiate to pay them back in full if they agree to remove your black mark. Many creditors should agree to this, as this is an offer right out of the blue, and they avoid having to pay a collection agency. Tell them you are trying to do the right thing, while still protecting your credit rating. Practice what you will say before you call them, and anticipate their reactions to your statements. If your creditor agrees to your proposal, always get it in writing before you pay them. They could just be baiting you into to pay them back, then they still leave the black mark on your credit report.

Credit Doctor Trick #3: This is similar to the credit repair services tricks mentioned earlier. You can use the Fresh Start software mentioned above, or simply write your own letter to the credit bureau and dispute the bad marks. You may get lucky and they won't get to it in time, or even better, maybe the original creditor went out of business, now the credit bureau will hit a dead end and will be required by law to remove the black mark because they cannot verify it with the creditor. Maybe the creditor was bought out by another company, and records were not well maintained. When the credit bureau investigates your claim, they'll hit a dead end and they'll have to remove your black mark. You may also direct the credit bureau to add 100 words of your own choosing to dispute certain items on your credit report. This trick is always worth pursuing if the others fail.

Restoring Your Credit

There's another way to restore your tainted credit: Start paying your creditors what you owe them. Then maybe the creditors will remove the bad marks from your credit history. This is a good negotiating point for you with your creditor. If you have several credit card balances, transfer as much as you can to your lowest interest rate card, then ditch the other cards. Cut them up and never look back. Leave your credit cards at home, and stay out of the malls you own enough clothes. Pay more money to cards with high APR, and ALWAYS send more than the minimum payment, or it will take years to pay off the balance. Here are some common methods that people use to pay off high interest debt:

• If you have cash in the bank earning a few percent, it's losing you more to income taxes, so you can use it to buy down your debt.

• If you have equity in your home, a home equity loan can be used to pay off your high interest credit cards. Sometimes APR on an equity loan is less than credit cards, and as an added benefit, the interest on home equity loans may be tax deductible, making the effective APR even less. Don't borrow more than 80% of the equity in your home. You can't write off the interest if you borrow more than what the house is worth. There may also be points charged at the loan closing so be sure to figure those into your analysis. This is dangerous in the wrong hands however, so make sure you close out the accounts you are paying off, so you don't run your balances back up again.

• If you have a stock that's doing bad and would create a loss for you by selling it, here's an idea. If you expect to have gains this year from your other stocks, one consideration is to sell your dog of a stock at a loss to offset your taxable gains, then use the proceeds of the sale to payoff your debt, which is losing you 18% APR. This just created 2 financial advantages for you. The same could be said about a stock that is making you money. You could sell the stock at a profit, then use the profit to buy down your debt, which is losing you 18% APR. Too many people who think they are smart investors only focus on their stock market "winnings" but fail to recognize that credit card debt at 18% erases your stock market gains. That's like a bad stock or mutual fund which is down 18%. You must pay attention to your total financial picture.

• If you have a retirement account at work, some companies allow you to borrow against this account and pay yourself back with interest. This can be a good way to earn more interest on your retirement funds, but this is also a risky loan. If you default on this loan, there goes your retirement money. You should seek the advice of a professional credit counselor before attempting this type of loan.

Sometimes you are just in too deep and your situation is too confusing. That's when it's time to bring in the pros. We are not talking about credit repair services with unpredictable scams, we are talking about credit counselors, that work out deals between you and your creditors for you to responsibly pay what you owe, and earning your good credit standing back, one creditor at a time. Many times the counselors can get your creditors to reduce the interest, or drop it altogether if you'll agree to pay back what they owe. This is a winning situation for all parties, as now your creditor does not have to hire a collection agency to get their money back.
Please see our chapter on credit counselors for more information.

Rebuilding Your Credit:

Once you have removed as many bad marks from your credit report as possible it is time to start rebuilding your credit rating. The first thing you need is a line of credit to use in order to prove that you are credit worthy. We recommend that you get ONE credit card to use. This way you will be able to control your spending and build a good history as quickly as possible. Use the card to buy gas or food, and pay it off in full each month to establish a pattern of responsibility. You can't get blood from a stone and the moral of the story is to not get into these situations to begin with. The way to build solid credit is to pay your credit bills on time. So how do people with bad credit get into these situations? By not taking their financial pulse and making a budget. You must have a budget and stick to it. Remember our Credit Rule #1? If you don't know how much money you owe your creditors, you have a credit problem. End of Sermon.