File Segregation Is Fraud
This old trick seems to be gaining popularity again. File segregation is the practice of creating a new credit file using a fake, stolen or some other form of tax identification number instead of your own social security number. Many people feel this is the only way they can enjoy good credit again, but one thing to keep in mind is….FILE SEGREGATION IS ILLEGAL!
I’ve seen some people’s credit reports that have attempted this. At first it works well for them, they easily get a secured credit card and start building a new credit file under this number. I’m not sure if its just a common slip up or that old adage that “there is no such thing as a perfect crime” but everyone always makes at least 1 mistake…..and that one mistake leads to a hawk alert on your credit report and a credit file merge.
What is a Hawk Alert
Its simply one of the alerts the credit bureaus will put on a credit report that they suspect has had some sort of manipulation or fraudulent activity. Recently we had a client apply for a business loan that was using his sons social security number. There was an alert on his credit report alerting us that the Social security number was issued in 2008. Well that was a BIG read flag. The sad thing was his sons credit report was shot! It had dozens of inquiries, lots of credit cards and unfortunately lots of charge offs and collection accounts. Because of what his father has done, this poor young man will have a lot of work to do to fix his credit when it comes time for him to create his own file. But unfortunately, using a child’s SSN is one of the easiest ways to obtain a SSN for file segregation purposes.
What Is A Credit File Merge
A credit file merge is when all that old bad credit that they where running away from merges onto the new credit report along with a BIG RED FLAG in the form of an alert at the top of their credit report advising creditors that you have credit under an assumed name.
What does that tell your creditors or future creditors….WATCH OUT!
Its really not worth your time or money to try file segregation. It would be better for you to just work on rebuilding your own credit .