CPN Tradelines: Should You Use Them?
A credit privacy number (CPN), is a nine-digit number sometimes marketed by unscrupulous companies as a way to get around a bad credit score by using an alternative to a social security number. However, there is no official government entity that issues CPNs, and using one could result in criminal charges for engaging in fraud, identity theft, or another serious crime.
What Are CPN Tradelines?
The bottom line is that CPN tradelines are a scam. The Federal Trade Commission (FTC) has outright called CPNs a scam, so they are best avoided.
Unfortunately, you can still find companies online claiming that CPNs are perfectly valid and legal to use. These companies market CPNs as an alternative to social security numbers as a way to maintain personal privacy or obtain credit.
The reality, however, is that no federal or state government has the authority to issue CPNs. You won't find any federal agency issuing such a thing as a "credit privacy number" or "credit profile number."
Despite warnings from the FTC and other entities, some unethical businesses claim they can sell CPNs as a way for people with poor credit to make a fresh start. In other cases, these companies claim consumers can use a CPN as an alternative to a social security number to avoid sharing their personal information.
This may sound like a good deal if you have a negative credit history that's stopping you from opening a credit card or qualifying for a loan. However, there is substantial risk involved in concealing your identity when applying for credit, and using a CPN can mean exposing yourself to the possibility of criminal charges.
Are CPNs Legal?
It's illegal to use a CPN, and it illegal for businesses to sell them. The companies that sell CPNs typically claim they have the authority to do so under the U.S. Privacy Act, a federal law passed in 1974 that gives people the right to withhold their social security number in cases where divulging the number isn't required by federal law.
Despite what these companies claim, the Office of the Inspector General (OIC) for the Social Security Administration has made it clear that CPNs are not legal. In a statement, the OIC wrote: "[A]re CPNs legitimate and recognized by the government? We'll make this easy—No and no."
It doesn't get much clearer than than. Still, sellers of CPNs often claim that because federal law doesn't require consumers to provide their social security numbers on credit applications, it's okay to use a CPN.
However, this is flat out wrong. Just because federal law doesn't make it a requirement to use your social security number when you apply for credit doesn't mean you can substitute a fake number, such as a CPN, as a way of concealing your true credit history.
In fact, the FTC explicitly states that using a CPN to obtain credit is a crime. If you buy a CPN and use it to apply for credit, you could face criminal charges.
How Do CPN Tradelines Work?
Because CPNs are not issued by the federal government or any official government agency at the federal or state level, there is no centralized entity responsible for generating these numbers. When you buy a CPN, you can't be certain where the number is coming from, which is one of the many reasons to avoid using one.
Unfortunately, the illegality of CPNs doesn't stop scammers from trying to sell them. There are numerous companies online claiming to offer "100% legal" CPNs, but these companies are operating in legal gray areas it's best to avoid.
Other companies may claim they can issue CPNs because businesses are permitted to use an Employer Identification Number (EIN). However, EINs are nine-digit numbers issued to businesses and some other entities, such as estates, by the Internal Revenue Service (IRS) for tax purposes.
In other words, there is no legal, legitimate way to obtain credit by concealing your social security number. If a company claims it can sell you a legal CPN or some kind of alternative, it's being dishonest.
Where Do CPN Tradelines Come From?
An internet search will turn up any number of companies claiming they offer legal or safe CPN numbers, but it's usually impossible to find clear information about where their numbers come from. Typically, these companies get their numbers by creating them from scratch or by stealing real social security numbers from the elderly, children, or the recently deceased.
If you find a company claiming it can sell you a legal CPN, chances are it generated the number in one of two ways:
Created CPNs - In some cases, companies that sell CPNs simply make them up. While some claim they use lawyers who file paperwork to get a CPN, this is misleading at best, as there is no government agency responsible for issuing CPNs, and there is no mechanism for a lawyer or anyone else to file paperwork to get one. In other cases, these companies use computer algorithms to generate nine-digit numbers the Social Security Administration has yet to use. This is problematic, as the number will eventually get issued as a social security number, which means an individual using the CPN could end up illegally using another person's social security number.
Stolen social security numbers - Unfortunately, some CPN sellers steal legitimate social security numbers from actual people. These unethical companies tend to target the vulnerable, preying on children, the elderly, the homeless, and the recently deceased. If you encounter a CPN company claiming it can sell you a number associated with an existing credit score, this is a sign the number is actually a stolen social security number. This is a major red flag that the company is engaging in fraud.
How to Get a CPN
There is no legal, valid method of getting a CPN. The reality is the only way to get a CPN is to buy one from a company engaged in fraud, which could implicate you in criminal activity.
The federal government never "sells" identification numbers of any kind, nor does it authorize any business to sell or distribute identification numbers to the public.
Ways to Boost Your CPN Credit Score
At the risk of sounding like a broken record, there is no way to "boost" a CPN credit score because there is no way to legitimately purchase a CPN. The only way to boost your credit score is to use legal methods for improving your credit profile, which is linked to your social security number.
Nevertheless, it's possible to find companies claiming they can give you a clean slate by selling you a CPN, which you can then use to apply for credit. These companies say you can hide your bad credit history by substituting a CPN for your social security number.
As the old saying goes, if something sounds too good to be true, it probably is — and this is most definitely the case with CPNs. If you use a CPN to apply for credit, you risk being charged with fraud, identity theft, or other serious crimes.
Risks You’re Taking with CPN Tradelines
Using a CPN tradeline exposes you to a number of legal risks. Just because companies continue to sell these fake numbers doesn't mean it's okay to buy them, and doing so
can mean fines and even jail time if you're caught.
Synthetic Identity Fraud
The proliferation of CPNs has created a new type of financial fraud known as "synthetic identity fraud." Instead of outright stealing another individual's identity, synthetic identity fraud involves creating a fake identity by blending actual and fictitious information.
For example, a company selling CPNs might create a synthetic identity by using a real person's home address, a second real person's phone number, and a third real person's social security number. The company can then sell this blended, manufactured "identity" to a fourth individual, who might use it to obtain credit.
Because synthetic identities typically blend information from several different people, they can be difficult to uncover and trace. However, federal authorities have cracked down on these types of identities in recent years, and they have started pursuing synthetic identity thieves more aggressively.
Identity theft is the practice of using another person's information in a fraudulent way. In some cases, companies that sell CPNs steal the social security numbers of young children or the elderly and then offer these numbers to customers as CPNs.
Stealing someone's identity is a serious crime, and federal authorities take these practices seriously. If you buy a CPN, you typically have no way of knowing where the number came from, and you may actually be using the real social security number of a
child, elderly person, or deceased individual — all of which are crimes.
Increased Enforcement and Security
In recent years, there have been a growing number of media reports of people facing jail time for using CPNs. In one case, a mother of three with bad credit bought a CPN online for $1,500 and ended up facing 30 years in prison for fraud.
According to the report, the woman was fortunate to avoid prison time after prosecutors agreed to reduce the charges, but she still ended up paying restitution and serving 18 months of probation.
In another case reported by the Department of Justice (DOJ), a man was sentenced to three years in prison for using a CPN to obtain $350,000 in credit. In the same presss release, the DOJ detailed four other cases in which individuals were charged with CPN-related fraud and sentenced to jail time.
When you want to repair your credit, the idea of a fresh start can be alluring. However, you shouldn't get a clean state at the expense of your reputation and even your freedom.
The reality is that CPNs are scams, and using one could land you in serious legal trouble. There are no shortcuts to good credit, and you should be wary of any company that claims it can help you get credit by using anything but your actual social security number.
Unfortunately, some scammers have gotten creative, and it's not always easy to tell if they're selling CPNs. To protect yourself, learn how to spot potential red flags.
Be wary of claims of a "fresh start" or "new credit identity" - No company can offer you a new identification number of any kind. In extremely rare cases, the Social Security Administration issues new social security numbers, but this is done through government channels and never simply because someone wants a clean slate for obtaining credit.
Stay away from companies that say you can use an EIN to get credit - Steer clear of companies that claim you can use an EIN instead of a social security number for purposes of obtaining credit. While an EIN is a legitimate number issued by the federal government, you can't use on in place of a social security number to get credit.
Alternative Options to CPN Tradelines
If you want to improve your credit score, there are legitimate ways to do it. You don't have to risk breaking the law to boost your score.
Instead of buying a CPN tradeline, consider some of the following safe and legal ways to repair your credit.
Pay your bills on time - Your payment history makes up 35 percent of your credit score, making it the most important factor in determining your score. You can usually see improvement in your score within a few months simply by paying all your bills on time every month.
Pay off debts - Your credit utilization is the ratio of how much credit you're using versus how much available credit you have. If you have a lot of debt, your credit utilization is probably quite high, which can hurt your credit score.Ideally, you want your credit utilization to be 30 percent or lower. You can bring your rate down by paying off debt, which gives you more available credit and helps boost your credit score.
Review your credit report and dispute errors - Around 4 in 10 Americans don't know their credit score. If you don't know your score, you might be overlooking mistakes and inaccuracies in your credit report that could be keeping your score low. By law, you're entitled to one free credit report from all three major credit bureaus once every 12 months. Once you get your free reports, review them carefully for any errors and make sure to file a dispute if you spot anything that should be listed.
While the idea of a clean slate for getting credit might be tempting, CPNs are illegal and best avoided. Instead, it's better to build credit using legitimate means, such as improving your credit utilization by paying down debt, disputing negative items on your credit report, and establishing a positive credit history by paying your bills on time.
About the Author
Mike is a recognized credit expert and founder of Credit Takeoff. His credit advice has been featured in CNBC, Investopedia, CreditCards.com, Bankrate, Huffpost, The Simple Dollar, Reader's Digest, LendingTree, and Quickbooks. Read more.