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3 New Credit Scams to Keep an Eye On

Written by John Ulzheimer

There’s no shortage of scam artists who would love to trick and manipulate you into handing over your hard earned money. If you’re currently facing the unfortunate problem of bad credit then you should be especially careful.

The stress and frustration brought about by bad credit can make you feel desperate for relief, which can make you more vulnerable to falling for a “quick fix” credit scam.

To be fair, every company claiming to be able to help you improve your credit is not a scammer. The idea that there are no legitimate, professional services available to assist you with your credit problems is dead wrong.

In fact, there are many credit counseling programs and even some reputable credit repair companies that may be able to genuinely assist you, as long as your expectations are realistic and you don’t expect anyone to wave a magic wand over your credit problems.

However, there are many fraudsters as well. Take a few minutes to review the following 3 common credit scams so that you can protect yourself and your loved ones from becoming one of their victims:

1. Credit “Repair” Scams

All credit repair companies are not scams and, contrary to popular belief, their services are not illegal. There are legitimate companies that can help you to dispute inaccurate or questionable items appearing on your credit reports.

It’s worth noting that even with the legitimate credit repair companies, you’ll still be paying a fee for something you could do yourself at no cost. Of course the same can be said of cutting your hair, repairing your car, or preparing your own taxes. It’s ultimately up to you to decide if you want to try to tackle credit-reporting errors on your own or hire a someone to assist you.

Warning Signs: All legitimate credit repair companies will comply with the requirements set forth in the Credit Repair Organizations Act (CROA). You should be VERY wary of any credit repair company that

  • Requires you to make a payment before they do any work on your behalf
  • Does not inform you of your rights including the right to dispute items on your credit yourself
  • Makes outlandish promises (like claiming they can delete everything from your credit reports)

2. New Credit Identity Scams

Another credit scam that has been around for many years is the “new credit identity” or “new credit file” scam. In this scam, the fraudster pretends to work for a credit repair company and tries to convince you that you have the right to use a tax identification number known as an EIN (employer identification number) to set up a new credit file for yourself.

A different twist on this scam is when a fraudster will try to sell you a CPN (credit privacy number) that can be used to create new credit reports.

You will create major problems for yourself, perhaps even landing you behind bars, if you participate in a new credit identity scam.

First, falsifying a loan application by using an EIN or CPN in place of your actual social security number can easily be considered bank fraud, mail fraud, and even wire fraud. If you were ever to default on an account obtained through this illegal trickery you could be facing some very serious consequences.

Additionally, if the CPN or EIN number you are using in place of a social security number turns out to actually be a social security number which belongs to someone else, then you could be committing identity theft as well.

Warning Signs: If a company tries to convince you that it is possible to create a new credit report or file for yourself through any method, you should immediately run away or hang up the phone. Beware of the term, “File Segregation.”

3. The Credit Sweep Scam

As is the case with new credit identity scams, the fraudsters who promote credit sweep scams often begin by posing as credit repair companies. They then promise that all of the negative information on your credit reports will be removed – quickly and and guaranteed.

There are 2 ways the credit sweep scam is typically performed.

First, the scam artist may actually have inside connections with collection agencies or the credit bureaus themselves. The inside connections may delete negative accounts from credit reports, typically in exchange for a bribe or payment.

The second way is when a scam artist files a falsified identity theft report on your behalf with the credit bureaus. Sometimes fraudulent police reports are filed as well to help strengthen the bogus claim of ID theft.

You should be aware that paying to participate in a credit sweep scam can come back to bite you because you are participating in a crime. Just like using a false social security number to obtain a loan can lead to charges of bank, mail, and/or wire fraud, acquiring a loan after participating in an illegal credit sweep scam can lead to the same types of legal troubles.

Warning Signs: No one other than the bank, collection agency, other furnisher, or the credit bureaus has the ability to remove of any accounts from your credit reports.  If someone claims that they have an insider at any of these organizations willing to remove information for a fee, run away FAST.

About the author

John Ulzheimer


  • I was taken by two firms. 1) A credit repair firm that said it could raise my “debt income ratio” when I gave them $1,200…..results…”nothing”! 2) A collection firm that said it could get back the $35K spent on home remodeling when contractor failed to return to finish job. I hired an attorney and went to court to get settlement in my favor, yet only 3 payment were made by contractor of which collection agency took 40%. I got several calls from the collection agency stating they could take contractor to court and if he did not show that their legal team would move to have him arrested for failure to appear in court, but wanted an additional $1,750 of which I lost as they have not collected. What can/should I do in these cases.

  • I want to know more about these credit bureaus are they a scam and do they have a board of directors and how do you sue them

  • I can’t thank you enough for all the information you have supplied. Do you also tell people how to get the interest rate lowered so the stupid card can be paid off?

  • About 12 years ago I was contacted by my bank Capital one concerning a credit repair company ,which was looking for more clients, they came through a vetted sponser the local chamber of commerce ,my credit looked like the titanic after it split in two…so what the heck I,ll give it a try,had a meeting in real fancy new multi story building in McKinney tx, the man I met with seemed professional and swore on his mothers grave they could improve my score,said it would take a little time but not to worry patting me on the back ,I enquired about the cost, he said they would call after they made an estimate, this was on a thursday…the following monday the slick speaking rep came by my business in rowlett tx( Dallas suburb) to give me the good news they were on track to improve my lot, also picking up a ck for 2,720 dollars ,not a small sum for a tiny company, the summary is nothing ever happened,after 6mths I contacted my bank officer who had reccomended this king rat in the first place,she was concerned,contacted the rat, ordered him to meet with me a 3rd time which he did, I think he was afraid the bank might make waves for him so he met with me just to extend time on his behalf, by the way went back to the original fancy offices they were all for lease looked like they had never been used. Big clue to this is and its been mentioned on this site before…..If someone comes to you for cash payment for any reason its a con no matter where it comes from. p.s I,m sure the rats mother is still alive, she probably abandoned him when he was a baby for taking to much milk!

  • I just dropped 150 points because someone else opened a credit karma account using a previous married name that I petitioned the court to be rid of. Everything I did was legal.TU said they would remove the other names. Now they’re using the name I had removed! This happened the same day I called about a fraud concern since someone had my S.S. income showing on my report, I was concerned. and now deny it! Only 3 days my score went from 700 to 555.
    I faxed all documents required. I now have Fraud Alert on my files. I have less TRUST for the credit report agencies! Am I destroyed again? It was expensive and hard to remove after ID theft!!

  • I had a finance company that I hadn’t used in 9 years do a hard credit inquiry on me cutting my score over 3 points. Is this legal? I contacted trans union & they said I would have to get the finance co. that did this to send them a letter giving permission to take it off. Lol. That’s bull crap. I think the credit bureau crock is just that, a crock of crap. I paid a loan off early & they lowered my score.Its all a big rip off.

  • The company you recommend regularly on your blog charges 179.00 up front then 99.00 after ….. Since they are asking for money upfront are they a scam also.

  • You used to speak highly of a company that claimed to be able to do this kind of work. On the strength of your word I contacted them. I DID NOT like their practices upon speaking to them on the phone. They seemed VERY shady. They made all types of promises about wiping EVERYTHING that was negative on my credit reports off. I told them I could do it myself. I did, and now my credit score is 742!!!!!!! THANKYOU for ALL your help. There should be more people like you!!!!!!!

  • I like reading your articles please keep them coming. Please send me information that could help fix my credit report

    • The only way to fix your credit. 1) Pay bills on time, every month. 2) Get a copy of your credit report at least once a year, and make sure there are no misreported negatives on it. If there are contact the vendor, or the reporting agencies to get them removed. 3) Don’t carry large amounts of revolving credit. If you use a credit card pay it off every month, if you can. If you can’t, don’t use your credit card, unless its a dire emergency. In other words Live Within Your Means. If you want to buy something expensive, save up for it first. Don’t charge things just because you have plastic. There’s nothing worse than buying something and by the time its paid for, its already sitting in a landfill. 4) Read Mike Roberts’ e-mails and follow his advice. Good luck.

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