With all of the problems we’ve seen recently in the economy, many of us have been left with bad credit scores. We have struggled to pay our bills. Many people have been out of jobs for long periods of time. Some people had illnesses or family problems that were out of their control. Some others have to admit that they’ve just been irresponsible. Whatever the reason, whether it’s been our own mishandling of our finances, or reasons beyond our control, our credit reports have suffered.
We are now looking for ways to improve our credit. We’ve been looking for ways to move forward from our bad credit, and find ways to move on. Some people have begun to find interest in the concept of file segregation. While file segregation may seem like a good idea at first glance, it is something that you should stay away from.
What is File Segregation?
To be able to understand the importance of staying away from file segregation, you must first understand exactly what it is. Lexington Law, a credit repair company, defines file segregation as the “fraudulent practice of creating a new consumer credit file typically performed by applying for an Employer Identification Number that is then used in place of a Social Security number on credit applications.”
So basically speaking, file segregation is getting a new “identification” in order to apply for new credit. Many people find themselves in very desperate circumstances. They find themselves very discouraged. So when someone brings up the idea of file segregation to them, it seems like they’ve finally been presented with a light at the end of the tunnel.
If you find yourself thinking this way, beware! While file segregation may seem like the perfect fix for your problems, it is definitely not the answer.
Why You Should Avoid File Segregation
This idea sounds great in theory. The ability to start fresh with a clean slate? Count me in! Well, don’t jump on that train too soon. There are some things you need to know about file segregation.
First off, it is a scam.
Second, it is illegal!
If you participate in file segregation you could face fines, or even jail time. Any company that pitches to you the option of file segregation is going to take your money and lead you down a path with bad consequences. If a company is trying to sell you on the idea of file segregation, odds are they may be a fraudulent company. Run the other way! Remember that file segregation is illegal, and it has real consequences.
There are Other Options
While it may seem tempting to take the shortcut of file segregation, you must remember that it is illegal. But that doesn’t mean that you are out of options. Your situation is not hopeless.
First off, remember that, with some good habits, bad credit will resolve itself in time. Work to build good spending habits. Work to build some positive credit history if you can. Establish a good work history. All of these things can help you in the future.
You also may want to check your credit reports for inaccurate items. If you notice that there are questionable negative items on your report that could be lowering your score, you may want to seek the help of a credit repair company to help you with any of these discrepancies.
Whatever you choose to do, know that file segregation is not a legal option, and it is not the answer.
The author of this article, Nicole, has years of experience with credit. She enjoys teaching people about credit scores and credit reports.