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: Best Student Credit Cards.]
A CPN Isn't Guaranteed to Work
Another reason to avoid scammers who offer CPNs is that there's no guarantee it will actually work.
"Lenders currently don't have a conclusive way of distinguishing a real Social Security number from one of these fake ones," says Robert Siciliano, security expert and CEO of Safr.me. "Technically, a lender can contact the (Social Security Administration) and cross-check, but most of them don't because the SSA requires a handwritten signature from the person who has that SSN."
O'Farrell says, "Sellers often advise CPN users to lie on credit applications in order to hide other identifiers a credit bureau might use." However, if a creditor's underwriting system recognizes that your name and the name tied to the number differ, it may trigger a manual review, which could expose the lie.
Also, if the number you're given is a stolen Social Security number, it may not have a credit history attached to it, which can also trigger a denial with some lenders because there's no way for them to determine how much of a credit risk you are.
If you do get approved using a number with a limited history, says Siciliano, you probably won't qualify for a lot of credit. "At a minimum, (lenders may) extend a couple of hundred dollars," which may not be what you need, he says.
This means that paying for and using a CPN could not only get you in legal trouble, but you may end up spending all that money with little or nothing to show for it.
What to Do if You Have Bad Credit and Need Credit Approval
If you're trying to get approved for a loan or credit card, but you're having a hard time because of a bad credit history, you have options that don't involve committing fraud. Here are some to consider:
Bad credit loans. While the loan terms they may offer aren't great, plenty of lenders are willing to work with people who have bad credit. Bad credit loans typically come with high interest rates and some charge origination fees, but it's better than getting yourself in trouble with the law.
Just be sure to watch out for payday, auto title and other loans that are often viewed as predatory loans due to their extremely short repayment terms and triple-digit interest rates. With this type of loan, you may end up borrowing again just to pay off the first loan, which could throw you into a vicious debt cycle.
Certain credit cards. As with loans, certain predatory credit cards charge exorbitant fees and interest to people who have bad credit. However, there are some legitimate credit cards you can get with bad credit that aren't rigged to cost you an arm and a leg.
For example, with the Indigo Platinum Mastercard, it's possible to get approved even with a previous bankruptcy on your credit report, and there's no security deposit required.
If, by chance, you can afford a security deposit, the OpenSky Secured Visa Credit Card doesn't run a credit check when you apply, which means the issuer doesn't consider the negative items on your credit report.
If you're approved for these or similar credit cards, you can get a revolving line of credit to use whenever you need it.
Assistance services. Depending where you live, your community may provide access to certain financial assistance services to help you with basic necessities, such as food, health care, child care and utilities.
Even if you need the money for something else, these services can help free up some cash that you would otherwise use for necessary expenses. Contact your city or county to find out whether services are available and how to apply.
Tips for Building Credit
It can take months or even years to get your credit history where you want it. But working to improve your credit score can put you in a better financial position over the long term. Here are some things you can do to establish a positive credit history over time:
Get a copy of your credit report. You can get one free copy of your credit report from each of the three national credit reporting agencies every 12 months through AnnualCreditReport.com. Once you check your report, look for areas that need to be addressed and potential errors that you can dispute with the credit bureaus.
Establish a positive payment history. Your payment history is the most important factor in your credit score. So if you're behind on some accounts, work to get caught up as quickly as possible. Then make it a goal to pay your bills on time going forward.
Reduce credit card debt. Another major component of your credit score is your credit utilization, which is the percentage of available credit on your credit cards that you're using at any given time. In other words, the lower your card balance is relative to your credit limit, the more it will help your credit score.
Avoid unnecessary debt. The more debt you take on, the harder it is to keep up with your monthly payments. If you can, try to save a little each month to build up an emergency fund, so you don't have to borrow the next time you experience an emergency. Also, try to avoid taking out new debt unless absolutely necessary.
Be patient. While your credit score will reflect some credit-building actions, such as reducing credit utilization, within a month or two, other changes may take longer. That's especially the case if you have some major negative items on your credit report. While something like a bankruptcy or foreclosure can damage your credit score now, though, the negative impact typically wears off over time, especially if you're using credit responsibly going forward.
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