What Is APR?
For those with bad credit, it can be frustrating applying for a credit card or loan and being denied. Individuals in this position may be tempted to use a credit privacy number as a solution to their poor credit score but it is strongly advised against.
Credit privacy numbers - also referred to as credit profile numbers - are nine-digit numbers that some credit repair companies claim can be used when applying for credit. Here we will go over what a CPN is, how they are used, and the dangers.
How It Works
CPNs are often advertised by fraudulent credit repair companies to individuals with poor credit scores. They claim that these numbers can be used to apply for loans and even help improve one’s credit score.
When an individual applies for a credit card or loan they must provide the lender with their Social Security number. This allows the lender to pull up the applicant's credit report and assess what level of risk the applicant poses. In an attempt to fool lenders, some applicants provide a CPN instead of their Social Security number in hopes of hiding their poor credit score.
Can A CPN Fix Bad Credit?
A common claim made by credit repair companies that market CPNs is that they are a solution to bad credit. In reality, this does nothing to repair the credit score of the individual using them. Even if they were able to obtain a loan or credit card using the credit privacy number, it would not have any effect on their true credit score because the fraudulently obtained loan would not be linked to the borrower's real Social Security number.
CPN vs. ITIN vs. SSN - What Are The Differences?
- CPN: Credit privacy numbers were created in the US Privacy Act of 1974 and decide how federal agencies collect personal information. Like Social Security numbers, a credit privacy number is a nine-digit code that is not accepted by government agencies.
- ITIN: An Individual Taxpayer Identification Number is a nine-digit number issued by the IRS to people who need to file taxes but are not eligible for a Social Security number.
- SSN: A Social Security number is a nine-digit number issued to citizens of the United States and is used to apply for social programs, file taxes, and apply for loans.
The Dangers Of CPN
These numbers are not a solution for bad credit and can also lead to several legal issues for the user. Below are the most common dangers of using a CPN.
- Misrepresenting Your SSN Is Illegal: The Federal Trade Commission outright states that CPNs do not improve one’s credit score and are illegal to use.
- Possibility Of Identity Theft: Many of the CPNs that fraudulent credit repair companies sell are dormant Social Security numbers that belonged to a deceased individual or already belong to a young child. Filling out an application form with a stolen SSN is considered identity theft, even if the individual did not know it was stolen.
How Can I Avoid Scams?
- Be Wary Of Promises Of A “New Credit Identity”: This is a common tactic used by scammers and illegal credit repair companies; they promise a new credit identity. Unfortunately, there is no such thing.
- Credit Repair Company Suggests Using Different Personal Information: Many providers of these numbers will attempt to have their customers use a different name, address, and contact information when filling out a loan application with a CPN.
- Instructions To Use EIN When Applying For A Loan: Many scammers and illegal credit repair companies will instruct individuals to use their Employee Identification Number on their loan applications. While an EIN is not illegal, it is meant to be used by employers when reporting information to the IRS, and is illegal to use them for loan applications.
- Payment Is Demanded Up Front: Any credit repair company or counselor who demands full payment upfront is almost always a scammer.
- Unrealistic Guarantees: Building good credit can take years and it can take a few missed payments to destroy it. If repairing credit was so easy everyone would be doing. Any guarantee that a credit card or loan will be approved even with bad credit is most likely a scam.
CPNs are not only illegal but can create serious legal issues for the user. On top of this, they do not accomplish what some credit repair companies claim that they do. Ultimately, there is no reason, under any circumstance, to use this type of number for the purposes of securing a loan or other credit.