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When you are considering hiring a credit repair company it is advisable to take a few precautions. There are people whose companies exist just to take advantage of you. Some people do this by keeping the "services" going, not to actually help you with your credit situation, but to have reasons to charge you for bogus actions. Others will take advantage of your ignorance by suggesting that you take actions that are not in your best interests. One way they do this is to convince you to do something that is illegal: Erase your credit history with an EIN or ITIN.

This particular action involves applying for an Employee Identification Number (EIN) or an Individual Taxpayer Identification Number (ITIN). The first number, the EIN, also known as the Federal Tax Identification Number, is a number that businesses acquire for their tax accounts and for filling out forms for the IRS. People who need this type of number are employers and sole proprietors, for example. It is not a number that individuals are expected to have. But, because it has the same number of characters as the Social Security Number (SSN), xx-xxxxxxx, it can be written to look like a SSN, which is the reason it is suggested that people apply for one.

The other identification number you can be encouraged to apply for is the Individual Taxpayer Identification Number (ITIN). The ITIN is a number designated for resident aliens, their spouses and dependents who are not eligible for a SSN. Citizens of the USA are not meant to apply for this number, but because it also has the same number of digits as the SSN, it can be made to look like a SSN. The ITIN always begins with the number 9 and is written xxx-xx-xxxx. Its purpose is to be for tax reporting only.

After a citizen has received either the EIN or the ITIN, a new credit history is created once you begin to give your EIN or ITIN in place of your SSN. This is called file segregation and is illegal.

There are several different federal charges you can be brought up on if you engage in file segregation. Misrepresenting your SSN is one. Obtaining an EIN under false pretenses, which you would be doing if you filed for an EIN and are not an employer, is another. If you were to apply for a credit card through the mail with a fraudulently obtained EIN or ITIN, you can be charged with mail fraud. Similarly, if you were to apply for a credit card over the phone with an EIN or ITIN you are not entitled to have, you can be charged with wire fraud.

The state may also bring charges against you on top of the federal crimes you will be charged with. Civil fraud, the act of misrepresenting information that prevents others from fully engaging in the use of a product, is a charge on the state level. Credit fraud would apply under the false title or ownership statute, because the EIN or ITIN were obtained fraudulently. Also, giving an EIN or ITIN when a SSN is expected is an example of credit fraud.

As you can see, following the advice of someone who instructs you to apply for an EIN or ITIN in order to wipe your credit history clean, is giving you bad advice. Knowing this puts you in a position of power before you get into a situation you will regret in the future, because ignorance of the law will not prevent a District Attorney from filing charges against you. Even if you do hire a credit repair company to help raise your credit score, it would still be very beneficial to learn all you can about the credit industry before you take bad advice like the common scam outlined in this article.

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