A credit privacy number, also sometimes called a credit profile number, is purportedly a nine-digit number you can use in place of your Social Security number on a credit application. People and companies that provide these numbers may promise that using a credit privacy number can hide negative credit items that may show up if you use your Social Security number.
But CPNs aren’t what they’re often marketed to be, and using one could cause more serious problems than they supposedly solve.
What Is a CPN?
A CPN is a number that certain companies sell to people who are seeking credit but have a poor credit history. The idea is that by using this alternate nine-digit number, you prevent creditors from seeing the credit report that’s tied to your Social Security number.
“CPNs are appealing because they offer some kind of credit hope to worried or desperate consumers who feel they’re being held back by a poor credit history,” says Neal O’Farrell, executive director of the Identity Theft Council, an organization that supports identity theft victims. “Fixing your credit the hard way can be daunting, and often difficult, so any shortcut is bound to be appealing. Unfortunately, the hope is false.”
That’s because CPNs aren’t legitimate, and the people and companies that sell them to desperate consumers are scammers. CPNs are sometimes made up, but they’re often stolen Social Security numbers, usually belonging to children who may not notice a fraudulent account on their credit report for years.
In addition to a CPN, some fraudsters may direct you to create an employer identification number and use it to apply for credit. While this number is often required for business loan and credit card applications, it’s not a legal substitute for a Social Security number.
Whether or not you realize using a CPN or EIN on a credit application is illegal, you could still face a steep punishment for doing so.
Why It’s Wrong to Use a Credit Privacy Number
A CPN provides an appealing prospect to people with bad credit. If you’ve just gone through bankruptcy, foreclosure, collections or other major credit struggles, the cost to get a CPN may feel like a good alternative to what seems like an inevitable rejection.
But there’s a good reason why using a CPN in place of your Social Security number on a credit application is a poor decision: It’s considered fraud.
When you apply for credit, the lender typically makes a decision based on your creditworthiness. In other words, whether you get the loan or line of credit and how much you pay in interest is largely based on the likelihood that you’ll repay the debt.
Your credit report and credit score are excellent indicators of the risk you present to lenders. If you have a long credit history and you’ve always paid on time, lenders will likely consider you a low risk and offer credit at a relatively low interest rate.
If, however, you’ve made some mistakes with delinquent accounts or a bankruptcy, lenders may view your credit history as a sign that you’re likely to repeat those same behaviors. If this happens, you may get approved with a relatively high interest rate or have your application denied altogether.
If you do anything to misrepresent your credit history or otherwise lie on a credit application, it’s considered a federal crime – and the penalty can be stiff. Those convicted of this crime typically are sentenced to at least six months in federal prison and must pay thousands in restitution.
In July 2018, for instance, a woman in Oklahoma was sentenced to 12 months in prison and ordered to pay almost $69,000 in restitution to the creditors she defrauded by using a CPN to make it seem like her credit was better than it actually was.
Also, note that it’s a federal crime to misrepresent your Social Security number and to obtain an employer identification number from the IRS under false pretenses. So while it’s tempting to use a CPN to give yourself a clean slate, the potential consequences for doing so far outweigh any potential benefits…..Read more>>