A bad credit auto loan is no shortcut to credit repair and no one should convince you that there is a magic bullet to help you more quickly repair your damaged credit especially if it involves a tactic called file segregation.
Credit repair and you
Our business is to match up our credit challenged customers, who have filled out our bad credit auto loan application, with dealers in our nationwide network that can help them get this kind of a loan. By doing this, applicants at Auto Credit Express can not only reestablish their car credit – a form of credit repair – they can also raise their credit scores.
Unlike tote the note dealers, the bad credit car loans our dealers use originate with lenders that will report your payment history to the credit bureaus. We also provide our applicants with much of the information they need since a poor decision could result in trapping them in a loan they can’t afford, possibly resulting in repossession. If this happens, the only remaining choice for most buyers will be a tote the note car dealer.
One of the keys to successfully reestablishing your credit is an understanding of the credit rebuilding process. For many people emerging from bankruptcy, or just trying to raise their credit scores in any way possible, the idea of repairing their credit quickly and raising their FICO scores through a credit repair agency can be very appealing. But you should stay away from companies that do this by establishing a new identity for you.
The process
We feel that the best (and nearly only, for most people) way of reestablishing your car credit is by taking out a bad credit auto loan. Although interest rates on these types of loans are higher than regular car loans, time and a good payment history will put you back on track in a couple of years. Unfortunately, there is no shortcut to the process that can help you immediately and your other alternative, a tote the note car dealer, won’t even report your payments to the credit bureaus.
There are companies out there, however, that will promise to cure your credit woes almost immediately. In some cases, for a fee, they will create a new identity for you. For some consumers who fear they may not be able to get any credit at all (such as those with a bankruptcy on their credit report), this kind of program would seem to be the answer to all their problems. This solution, however, could land them in a lot of trouble.
File segregation
Here is how it works: The credit repair company sends out a letter addressed to individuals who have recently filed for bankruptcy. The letter states, in brief, that because of their bankruptcy, they will be unable to get a credit card, a personal loan or most other types of credit for 10 years (which is totally untrue). To prevent this from happening, the company will, for a fee, hide their bankruptcy by establishing a new identity for them that can be used when applying for credit.
In addition to sending out letters to individuals on bankruptcy lists, these companies also advertise in the classified sections of newspapers, on radio, on TV and on the internet. The problem is, if you take the bait and sign up, things can quickly go from bad (your bankruptcy) to worse.
What an EIN is
Many of these credit repair companies will then suggest that you apply for an EIN (Employer Identification Number) from the IRS. Although an EIN may look like a social security number, it is an identification number that is designed for businesses to report their financial information to the IRS and the Social Security Administration. Once you receive this number, the credit repair company will tell you to use it instead of your social security number when you apply for credit.
Not a good idea
In the first place, it is a crime to obtain an EIN for anything other than a legitimate business. If you use a phone or the mail to apply for one, you could also be charged with mail or wire fraud and in many states it is also a civil offense. Enough said.
Credit repair suggestions
While it’s true that a bankruptcy appears on your credit report for 10 years, there are ways that you can legally begin to repair your credit as soon as the bankruptcy is discharged:
- Apply for a regular or secured credit card. Unlike a regular credit card, the secured credit card requires that you maintain a savings account with funds to cover the credit limit of your card. While this may not make sense, these banks do report to the credit bureaus so you can establish a positive payment history. Once you have a year or so of on-time payments, you can then apply for a regular credit card. Many of these lenders also have a provision that allows a secured card to be converted to a regular card once you’ve established yourself.
- Apply for a bad credit car loan. Even if you’ve had a car repossessed, as long as that repossession was part of the bankruptcy – not before or after – there are many subprime car lenders that will consider you for a loan. There are also online web sites that specialize in directing applicants to dealers that are experts in bad credit financing, helping you avoid the embarrassment of being turned down at a dealership. One such site is www.autocreditexpress.com.
Doing it right
Beware of companies that promise shortcuts to credit repair. As part of the Credit Repair Organizations Act, it is also illegal for any company to charge you for repairing your credit until they have performed the service. Remember, if it sounds too good to be true, it probably is.
Here at Auto Credit Express, we specialize in placing customers with bad credit with dealers that can help them. Our affiliate dealers are knowledgeable and will treat you with the same high respect that they treat every customer that walks through their doors. If you have any questions that our web site can’t answer, feel free to call us at the toll free number listed there.
So if you are serious about getting your credit back on track, why not begin a new chapter in your life by filling out our bad credit car loan application.
