Hundreds of Internet companies are lurking in cyberspace, waiting for people with bad credit to come calling.
They have plenty of potential customers. As of this past April, an estimated 43.4 million Americans had credit scores of 599 or lower. That means they’re considered poor credit risks.
Many of these consumers have turned to fly-by-night operators of schemes that may or may not improve the buyers’ creditworthiness. In our view, the risks of such ventures far outweigh any potential benefits.
The shady schemes tempt prospective buyers with all kinds of promises. You’ll be able to buy that car, major appliance or other durable goods once you’ve repaired your credit.
You do this simply by making no use of your Social Security number. You refer instead to a Credit Profile, Credit Protection or Credit Privacy Number, or CPN, created with people like you in mind.
Sellers of the CPNs get their raw material from “dormant” Social Security numbers, often those issued to children who won’t use them for years. The crooks use computers to troll the Internet for these idle numbers and issue them to buyers for as much as several thousand dollars.
When it’s brand-new, the CPN won’t have a credit history — very young children seldom charge much. A history can be created through a process called piggybacking, a process of linking your credit status to the file of someone else who has good credit.
It’s all illegal, of course. By using a number you’ve basically made up, you’re committing fraud. You might decide to keep your new line of credit up to date, paying all your bills on time.
Or you might simply run up a bunch of debt and walk away. (Sellers of these numbers sometimes urge buyers to list an address they’ve never used before.) You might then buy another phony number and start the process again, leaving another bad credit history a young person might not discover for years.
Those who sell numbers used to steal the Social Security numbers of people who have died. The Social Security Administration maintains a death index, so credit bureaus can quickly spot that sort of fraud attempt.
Gathering the dormant numbers of children is harder to detect and to prevent. It’s worth taking the time to request a credit report for your child, even though he or she should have no credit history. Every resident of Maine is entitled to one free credit report each year from each of the three major reporting agencies, Equifax, 800-685-1111; Experian, 888-397-3742; Trans Union, 800-888-4213.
We suggest asking for your child’s credit report from one of the three now, another in four months and the third four months after that. Keep checking every four months to verify that the report is clean. If fraud is detected, you can place a freeze on all credit activity to prevent further damage while the situation is straightened out.
With the issue of Maine students’ Social Security numbers in the news, the issue is on most people’s radar. It’s a good time to think seriously about credit fraud and identity theft and the legal ways to keep your credit history clean.
Consumer Forum is a collaboration of the Bangor Daily News and Northeast CONTACT, Maine’s membership-funded, nonprofit consumer organization. Individual and business memberships are available at modest rates. For assistance with consumer-related issues, including consumer fraud and identity theft, or for more information, write: Consumer Forum, P.O. Box 486, Brewer 04412, or go to http://necontact.wordpress.com.