A credit privacy number (usually referred to as a CPN) is a nine-digit unique identifier, like a Social Security Number. The CPN is occasionally promoted to people with bad payment history to establish clean credit records. Financial entities that provide a CPR claim that it replaces a Social Security Number on a loan request. However, on the other hand, many reputable financial advisories consider the CPN as a financial scam and recommend staying far away from it.
If you request a Social Security Number through CPN, you may unknowingly get implicated in identity theft and wind up in prison. You will likely be required to obtain a driver's license registered with a new address, get a new phone number, and create a new email account. Plus, you'll have to pay for the digits you intend to use instead of your SSN.
Similar fishy requests should raise a huge red flag. The Federal Trade Commission has issued a warning against organizations that provide a new credit identity by calling it a fraud.
CPNs Explained: Do They Help with Bad Credit?
Companies that offer CPNs promote them as an SSN alternative giving the illusion that CPNs are legit. Many websites selling CPNs, for example, state the identification digits are completely tri-merged with the SSA (Social Security Administration). However, in fact, these businesses are con artists. They may gain SSNs through unlawful ways, frequently from youngsters or jail prisoners.
If you pay closely, you'll see a plethora of red flags indicating that CPN vendors are up to no good. While SSNs are free, corporations will charge you a fee for a CPN, which can go into the hundreds of dollars. In addition, they may advise you to submit inaccurate information when filling out a loan request with the CPN. They'll frequently suggest that this is a means to safeguard your identity, but in reality, they're pushing you to make a fake identity.
If you want to restore your credit, it's easy to overlook these warning signs. However, utilizing a CPN might result in far more serious issues than a low rating.
Important to Consider: providing misinformation on a loan request or falsifying your Social Security number is a federal offense.
CPNs vs. ITINs vs. SSN
In order to enforce tax rules, the Internal Revenue Service (IRS) applies so-called taxpayer-identification numbers (TIN). ITINs (Individual Taxpayer Identification Number) and Social Security Numbers are two taxpayer ID numbers. The Social Security Administration issues SSNs, which most individuals use when paying taxes. Under particular circumstances, the IRS issues ITINs to sort out non-residents and resident immigrants, family members, or dependents who cannot get SSNs. An ITIN is designed similarly to an SSN (nine digits and dashes); however, all ITINs start with the number nine. CPNs also consist of nine-digit numbers; however, they are not issued by federal bodies like the Social Security Administration.
What About Replacing SSN?
When you have bad credit, and it costs you money and limited opportunities, you always try to start over again. However, obtaining a new SSN, on the other hand, is not the solution. The IRS can only issue a new SSN if and only if you meet the following criteria:
- Sequential SSNs given to the same family member induce difficulties.
- The same SSN is issued to or used by more than one individual.
- An identity thief victim still experiences problems because of using his original SSN.
- When you are being harassed, humiliated, or hold a risk of losing your life.
- You have religious or cultural objections to changing digits of your SSN.
Obtaining a new SSN is difficult even in these exceptional circumstances. You'll need to provide all the documents requested by the SSA and obtain assistance from others, such as the police, community, or your church.
More specifically, just because you acquire a new SSN doesn't imply you can get rid of your old one. The Social Security Administration will cross-index your new SSN with your prior one to avail yourself of the best credit for your earnings and get the correct sums of Social Security payments when you retire. Whatever you do, you will always be associated with your initial SSN.
Increase Your Score in Lawful Ways!
Opting for a CPN will not instantaneously erase negative records, thus boosting your borrowing power right away. A better method would be investing in the proper means of restoring your financial history. This is how it is done:
On-time payments: Your score is heavily influenced by on-time payments. Even if you can afford the minimum payment on your debt, making it on time may help you build credit. You may also go for scheduled payments to prevent missing due dates. Paying your utility bill may also help boost your score. Sign up for programs such as Experian Boost, add all this information to your file, and profit from your good track record.
Keep credit utilization ratio low: The credit utilization ratio, otherwise known as "amounts owed," reflects how much debt you accumulate within your credit limit. To maintain your score in a good stand, keep your utilization rate below 30%, but for the finest results, consider single digits.
Avoid hard pulls: Your score may suffer as a result of hard inquiries. Even though a score drop often lasts only a couple of months, applying for multiple loans in a short period may leave derogatory marks on your file.
Keep old accounts: If a credit card drains your bank account, canceling it after your debt has been settled may appear a wise decision. However, doing so decreases your credit limit, which usually raises your credit usage ratio. In addition, maintaining older accounts demonstrates that you've paid for a loan over a long period, which improves your score. Even if you don't intend to use a credit card, try to keep accounts active.
Fix errors on a credit report: Any error or inaccurate information on your financial report may lower your score. Thus resolving inaccuracies on your credit report might help you boost your score rapidly. Once a year, you may take out a free credit report from each of the financial bureaus at Annualcreditreport.com.