YourCreditReport.ca: credit reports, credit cards, fixing your credit and personal bankruptcy in Canada

Credit repair. Credit-repair companies run advertisements in newspapers, radio, TV, and the Internet, offering consumers assistance, for a price, to clean up their credit histories. The Federal Trade Commission (FTC) warns that many of the claims these companies make—that they can remove judgments, liens, and other unfavorable information from credit records, are false. They cannot legally remove accurate negative information from a credit report and any legitimate help they can offer can be pursued by consumers themselves, at little or no cost.

Advance-fee loans. The lenders appeal to consumers who, based on their credit history, can’t get a loan. The scammers falsely promise that for an advance payment, even consumers with bad credit histories can get a loan. Some of these lenders make money through the 900 numbers that charge consumers who call to find out about the loans. Others simply charge consumers a fee for a loan that is never delivered.

Home equity. Unscrupulous lenders target consumers who have good credit, but have a bad cash flow. They offer credit based not on income or the ability to repay, but on the equity of the home. Exploitative lenders may take advantage of the borrower by abusive practices such as “loan flipping” by repeatedly talking the borrower into refinancing the loan, which adds to the cost of the debt. If you don’t have enough income to make the monthly payments, you will probably lose your home, as many consumers do through these schemes.

Identity theft. This crime occurs when con artists steal credit card numbers, social security numbers, mother’s maiden names, or other personally-identifying information without one’s knowledge, to tap into the good credit histories of consumers. They then set up new credit accounts, charge purchases to existing accounts, or drain bank accounts. Frequently, consumers don’t know that their credit identities have been stolen until they get bills for credit card accounts that they never opened, see charges on their bills that they didn’t know anything about, or discover that their bank accounts have been fraudulently accessed.

Congress passed the Identity Theft and Assumption Deterrence Act of 1998, which makes it a federal crime to knowingly transfer or use another person’s means of identification to commit any unlawful activity.

File segregation. This is a relatively new scam that could get you fined or sentenced to jail time if you use it. It is an illegal scheme used by credit-repair companies to encourage consumers with unfavorable credit histories to obtain new taxpayer identification or employer identification numbers from the Internal Revenue Service under false pretenses and use them to hide their true credit identities from creditors. For a fee, the companies promise advice on how to go about segregating their credit files. File segregation is illegal and consumers who employ it are committing a felony.