Many credit repair "specialist" and competitive products set at the center of their marketing message the idea of getting new credit instantly and painlessly.

This is a real bad idea. Not only is it illegal; it's not even effective.

The Hook
The lure is a "clean slate" with which to start over. Save time. Save money. Just create a new identity and start building credit under that new credit file.

The Details
There are two ways to accomplish this. One is to obtain a new social security number. The more common is to obtain a Federal Tax ID from the IRS which is used to identify a business. You can see an example on your W2 forms. This is the "social security-like" number you will find on these tax forms from your employer.

When a person applies for credit under a number that has never been used, the bureau has no history of such a number and as a result, they create a new credit file. The new credit file is empty.

The Problems
To use a new social security number to build a new credit report is not only illegal, but it is also ineffective. If a borrower is around 40 years of age, and has only a six month or one year credit history, an immediate red flag is raised in the lender's mind. There is little doubt that a name and address cross check will be made, and the old number, along with the questionable credit report will surface, leaving the borrower worse off than before. In fact, the borrower may be charged with fraud or intent to defraud the lender.

Keep in mind, a totally clean credit record is not needed to obtain a mortgage. If credit problems exist, clean up all you can legally using your Fresh Start manual. Get your credit balances down and debt-to-income ratio in line (below 85%); then have a frank and open discussion with a mortgage broker who has special programs for the credit challenged. These special programs are referred to as B or C paper. Lenders want to make loans, and they will work with prospective borrowers to put together a loan program. You may start at a higher interest rate, but by continuing to improve your credit using How To Borrow Your Way To Wealth, you will be able to refinance in a year or two as a lower rate

Peter Graham is a staff writer for Insider Reports^®: The Right Advice @ The Right Time
Information and resources to help you do it yourself since 1987.
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