Congressman Patrick McHenry wants credit bureaus to stop using Social Security numbers.

McHenry introduced a bill that would ban the practice by 2020 in wake of Equifax's massive data breach that exposed millions of Americans' Social Security numbers. The legislation would also create regulations for credit bureaus and credit freezes.

McHenry, a Republican from North Carolina, argues Social Security numbers were never intended to be essentially a national identification number. As for what to use instead, McHenry said the private sector can decide. Some possibilities could include blockchain technology, biometrics or personal identification numbers.

"The day and age of us using Social Security numbers in the hands of consumer credit bureaus should end. It's absurd we're this far along with our personal identifiable information being given to credit bureaus most Americans have never heard of," McHenry told CNBC's "Power Lunch" on Friday.

McHenry said the free market argument to let credit bureaus operate how they see fit does not work in this case.

"I look at this and say, 'Well, you're using my information, and you're trying to profit off of me with my information. Let's just at least stop that. That's one. Two, let's not make it so easy that when you get hacked, two-thirds of the American people have the consequences of your ineptitude,'" McHenry said.

On Thursday, Equifax said it was investigating another possible cyberbreach before determining it had not been hacked again.