Updated: Jan 26, 2022
It seems like lately everyone seems to be asking about Credit Privacy Numbers, or CPNs, and how they can be used when applying for credit. Depending on the source of your research, the information may be wholly positive or wholly negative. While CPNs can be a valuable resource for a select group of recipients, they are certainly not intended to be used as a replacement for the standard measure of identity, your social security number.
Also known as Credit Profile Numbers, CPNs are useful for military leaders, movie stars, government officials, or other public figures who are hoping to shield themselves from identity theft. CPNs are also typically assigned to victims or witnesses placed into federal protection programs. I refer to CPNs as “Credit Piracy Numbers” because, in many instances, that is exactly what the users are attempting to do – steal or pirate credit.
There are companies who advertise the ability to build a new, cleaner credit profile for those with poor credit history, but even the most legitimate of these companies often don’t provide all the facts about what the purchaser is buying into.
A CPN is a nine-digit identification number that acts like a social security number (SSN) and, for certain people, may be used in lieu of an SSN for obtaining credit. Because of their potential to be used by fraudsters, they have also raised red flags with certain agencies who view them as suspicious, even fraudulent. It is for this reason that the government has placed protective shields around federal funding and its availability to those who are using CPNs as a primary identifier.
Even though you have a right to keep your SSN private, you are required by law to disclose it to employers and certain agencies, such as the Internal Revenue Service, motor vehicle department, federally insured lenders, or when buying a firearm, even if you have a legitimate CPN in place.
Although a legal CPN can be used when applying for credit cards and obtaining financing that is not government related, the practice has garnished a negative stigma due to some less-than-desirable techniques practiced and the frauds being perpetrated by an unsuspecting public. Customers are typically sold a CPN and told that they can use the number in place of their true SSN to create a new credit file. While the number they generate can be a random selection of nine digits, oftentimes the new CPN will match a SSN belonging to underage minor children or deceased individuals. If you use those numbers, it could open you up to being investigated for fraud or identity theft.
Fraudsters oftentimes will use this new CPN number and the new credit file in an attempt to intentionally hide bad credit history. The use of fabricated information or a stolen SSN to obtain credit that the applicant is not otherwise qualified for constitutes fraud. Certain federal programs, such as Freddie Mac, Sallie Mae, FHA, and SBA have made their position very clear: Credit Privacy Numbers cannot be used when applying for their government sponsored home or business loan options.
In a July 18, 2013 blog post by Freddie Mac, Emerging Fraud Trends: Using Credit Privacy Numbers to Falsify a Credit History, they warn housing lenders to “… remain vigilant to re-emerging credit building/repair scams, such as the misuse of credit privacy numbers (CPN) to manipulate credit records.”
In an undated blog posting by wiseGEEK, Conjecture Corporation, they further clarify an individual’s responsibility to debt incurred by CPN holders. “One of the urban myths surrounding the use of a CPN is that the credit file number can be used to avoid paying outstanding debt. In fact, the individual remains liable for all debts incurred on credit accounts referencing a Social Security number or a CPN.”
They go on to say, “Obtaining this number will not result in establishing new credit to replace bad credit generated under a Social Security number.”
It is for this reason that we will never recommend the use of CPN numbers as a means to misrepresent your ability to repay debt, manage your business credit profile, or achieve business credit approvals. We believe sound business credit starts with sound business practices and ends with a strong credit profile that mirrors your good reputation and reflects well upon your company.
Please contact us directly if you have questions about how to legitimately build business credit.
FTC posted scam alert:
Credit repair companies who promise a “new credit identity” … “say they can help you hide bad credit history or bankruptcy for a fee. If you pay them, these companies will provide you with a nine-digit number that looks like a Social Security number. They may call it a CPN — a credit profile number or a credit privacy number.”
“The credit repair companies may tell you to apply for credit using the CPN or EIN, rather than your own Social Security number. And they may lie and tell you that this process is legal. But it’s a scam. These companies may be selling stolen Social Security numbers, often those taken from children. By using a stolen number as your own, the con artists will have involved you in identity theft.”
The FTC goes further, posting the following warning:
“If you follow a credit repair company’s advice and commit fraud, you might find yourself in legal trouble.
It’s a federal crime to:
lie on a credit or loan application
misrepresent your Social Security number
obtain an EIN from the IRS under false pretenses
The bottom line is that if you use the number they sell you, you could face fines or time in prison.”
LESSON: Small business owners face enough risk in the normal day-to-day battle to stay ahead of federal requirements, local licensing, and paying your bills on time. The last thing you should do is put yourself or your company at risk of losing the single most valuable commodity you have, your good credit reputation.