Credit Repair

What Is a Credit Privacy Number, and Do You Need One?

If you have a poor credit history, you probably have trouble getting approved for any type of credit or financing. But that doesn’t mean you don’t find yourself needing credit or a loan to help you out of a tight situation.

If you wish you could erase your blemished financial past and start fresh, a credit privacy number, or CPN, may seem like a way to do just that. Credit repair companies often peddle CPNs to people who want to apply for credit without being associated with their own poor credit score. However, CPNs are typically part of credit repair scams and may do more harm than good. Before purchasing an CPN, be aware of the consequences you may face.

What is a credit privacy number?

A credit privacy number is a nine-digit number that resembles a Social Security number, said Jim Holtzman, adviser at Legend Financial Advisors in Pittsburgh, Pa. You may come across a CPN for sale when seeking service from a credit repair company, Holtzman said. A company would sell you a CPN with the promise that you would have a new identity to apply for credit.

That promise, however, would be unfounded, Holtzman said. CPNs are often stolen Social Security numbers or Employer Identification Numbers that you can be penalized for using. If you apply for credit or financing with a number other than your own, you won’t be approved and you could face fines or prison time.

People with poor credit who seek out credit repair companies are most likely to fall into the trap of using a CPN, Holtzman said. He’s seen companies charge between $500 and $5,000 for a CPN. While most people fall for CPN scams unknowingly, he said you would still be committing a crime if you use a stolen or fake identification number, whether or not you’re aware of it.

“You’re going to run into a full host of problems,” Holtzman said.

Can a CPN improve your credit?

A CPN seller would likely tell you that using a CPN in place of your Social Security number would help you improve your credit, but that’s not the case, Holtzman said.

If you put someone else’s identification number on a credit or loan application, the credit company is going to pull that person’s credit history instead of yours. Any action you take with a CPN, such as signing up for a new credit card, would be attached to someone else’s identity. You wouldn’t see any change in your own credit score, Holtzman said.

“I struggle to see where there can be any use to this,” he said.

There’s also little chance that you would be approved for anything using a CPN. Credit reporting agencies like Equifax look at dozens of other pieces of information to confirm that you are who you say you are, Holtzman said. If your CPN doesn’t match the rest of your personal information, you’re not going to be approved and local authorities or FBI may flag you for identity theft.

Red flags

To avoid being duped into buying a CPN, there are a few signs to watch out for when looking for a credit repair service.

Pressure to pay for a CPN

If the credit repair service’s initial solution to your credit woes is selling you a CPN, you should be wary, Holtzman said. It indicates that the company might not be as reputable as you thought.

“If they try to sell you this number, I think it’s going to be a red flag right out of the gate,” he said.

A credit repair company shouldn’t pressure you to pay any upfront fees before providing an actual service. The Credit Repair Organizations Act prohibits credit repair companies from requesting or receiving payment until they’ve completed the promised services to improve your credit.

Promise of a “new credit identity”

Companies may lure customers with the promise of blank slate, which may be appealing to those with a history of credit problems. However, it is illegal to misrepresent your Social Security number and to lie on a credit or loan application.

You can’t be approved for credit without using your own Social Security number or Employer Identification Number, which you can obtain from the IRS. The premise that you can substitute your own information with a CPN is untrue.

“You’re not going to get the credit anyway,” Holtzman said. “It’s a false number.”

Request that you dispute negative information on your credit report

If a company asks you to legally dispute negative but accurate information on your credit report, it may be a sign of a scam, Holtzman said.

You can’t remove accurate and current information from your credit report, even if that information is negative and hurts your credit score. A reputable credit repair service wouldn’t ask you to attempt to get rid of this information to improve your credit.  If the company also tells you not to contact any nationwide reporting companies directly, that would be another sign that they’re running a scam.

The bottom line

Buying a new identification number to escape your credit troubles may seem like an easy way to solve your financial problems, but it’s too good to be true. Not only would you not be approved for any loans or credit, you could face fines or jail time for using a CPN.

“I can’t see any good that can come of it,” Holtzman said.

If you need to improve your credit, seek out reputable credit counselors that can help you improve your credit score, Holtzman said. The U.S. Department of Justice provides a list of approved credit counseling agencies. You can search for an agency by state or judicial district here.

After you’ve put together a list of agencies in your area, you can check them out for yourself with your local consumer protection agency or state Attorney General’s office. You can also ask the agencies for free information about the services they provide. A reputable credit counselor would be willing to send you free information without asking questions about your financial situation.

It’s important to take steps to improve your credit so you can avoid falling victim to credit scams in a moment of desperation, Holtzman said.

“You want to work on increasing your credit score and things will get a lot better,” he said.

 

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