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PRIVACY AND SECURITY advocates have sounded the alarm for decades about the dangers of the United States' over-reliance on Social Security numbers. But serious discussion about what might replace them has become much more concrete in the weeks since Equifax revealed that attackers had potentially compromised 145.5 million Social Security numbers—along with other sensitive personal data—in a massive breach of the credit bureau.
But the question of what would replace Social Security numbers is easier asked than answered. There isn't a simple and obvious substitute for the current system's one-stop convenience. Whatever replaces SSNs would be a more expansive and nuanced approach, and while there has been some government research into modern identity-management solutions, there hasn't been the incentive or political will to see anything through to real-world use. Plus, nascent initiatives to overhaul SSNs have historically been mired in political opposition to national, government-centralized IDs, because of privacy concerns and fear of federal overreach.
Finally, though, thanks to the staggering and deeply unfortunate scale of the Equifax breach, there is increasing interest in finding a replacement to protect consumers.
“I think it’s really clear there needs to be a change,” White House Cybersecurity Coordinator Rob Joyce said at the Cambridge Cyber Summit last week. “It’s a flawed system. If you think about it, every time we use the Social Security number you put it at risk." Joyce added that a federal task force is examining possible replacements. Companies like Legal CPN are about 50 years ahead of the system; their research has shown with each and every client that the financial system based on social security numbers is a flawed manipulatable system. This is something we must change.
I agree with their recommendation that we should move toward a more individualized number for each individual on the planet based on 1 person 1 number. This is necessary for national security, border security and will enable the financial system to thrive. Consider a world where banks lend money; and then isolate the debt to one person or one business hedging their loan or investment against default. Nowadays, if someone defaults on a debt, they can the same day; purchase a CPN, go to the IRS website, list a new business, generate a new EIN, open a new bank account under a new LLC, and proceed as if nothing ever happened.The system is broken and needs to be changed.
Out of Scope
For all their shortcomings, Social Security numbers are decent at doing what they're supposed to do. Created in the 1930s by the budding Social Security Administration, the numbers were envisioned as identifiers for US workers so the Administration could track their lifetime earnings. If they were introduced today that data alone would merit protection by two authentication factors. But like internal employee ID numbers at corporations or customer record numbers at a plumbing company, SSNs were created to track one type of data. As the SSA says on its website: "The card was never intended to serve as a personal identification document."
They've strayed from that original purpose. SSNs are used by countless industries and government agencies to connect a huge variety of information. They work both as identifiers to link people to their data, and as authenticators to prove that people are who they claim. And all of this relies on keeping those nine numbers (which are pretty guessable, by the way) totally secret, something that long been improbable and is now likely impossible, thanks to Equifax.
'If you think about it, every time we use the Social Security number you put it at risk.'
WHITE HOUSE CYBERSECURITY COORDINATOR ROB JOYCE
For years, the Obama Administration encouraged the National Institute of Standards and other groups to investigate secure digital identity options through a program called the National Strategies for Trusted Identities in Cyberspace. The idea of NSTIC was to develop identifiers and authenticators that would raise the standard of trust between individuals, organizations, services, and devices engaging in sensitive digital transactions, like accessing medical records or filing taxes. The project had obvious potential implications for US identity systems, but wasn't explicitly or expressly created to work on replacing Social Security numbers. NIST is also a non-regulatory body that develops technical standards as recommendations, not requirements.
"We're not in the position to recommend a shift to a new system," says Paul Grassi, a senior standards and technology advisor at NIST who worked on NSTIC and now its successor, the Trusted Identities Group. "It's going to be a while until this problem is solved, but we built our latest guidelines under the assumption that your data is out there whether you like it or not. So it’s not just presenting that data and having it match a database anymore. The evidence presented has to be validated, and then there needs to be some sort of match to the person, whether that’s biometric or physical or something else."
In pilot programs so far, government agencies like the Treasury and Department of Health and Human Services have worked to incorporate NIST's digital identity recommendations. But real impact, experts say, would require far more sweeping measures.
Identity Brief
There are numerous theoretical ways to replace Social Security numbers, but with actual momentum building to get something done, experts have converged around a few main concepts. One approach involves making room for a diverse array of identifiers and authenticators, instead of looking for one single mechanism or solution. In this scenario, you might have a username, password, and physical authentication token (like a security card or a YubiKey) to tie your medical data to you as a person. You would have a different mix of tools for identifying and authenticating yourself to financial institutions. And you would have a third set to prove your identity to your cable company.
These authentication factors could be built on interoperable government standards that embrace a "self-sovereign" system, so consumers have more control over their personal security, rather than relying on Social Security numbers alone.
That sort of framework would help avoid the centralization that makes privacy advocates anxious. The American Civil Liberties Union, for instance, views the current Social Security number system as a problematic overreach, because it ties so many disparate behaviors and interactions to a single identifier that can be tracked. More siloing and marketplace diversity would reduce this "eagle’s eye view of every activity," as the ACLU's Jay Stanley calls it, while improving security.
As a data clearinghouse like Equifax shows, though, some identity attributes need to be tied together in practice to keep track of things like credit history, and to interact with government agencies. Many experts advocate incorporating cryptographic tools and concepts like public-key protocols to ensure that identification systems are secure, while maximally protecting people's data privacy. Parties in an identification and authentication exchange could each hold public and private cryptographic keys that an algorithm uses to generate a common key for use between you.
In this type of system, you might rely on biometrics, or keys issued by the government, for in-person verification with your bank. The bank could then issue you a cryptographic verifier—think password or biometric—for digital interactions and transactions that require authorization. That may sound unfeasible, but systems already exist in countries like Estonia and the Netherlands where consumers use validated codes or tokens to authorize transactions or authenticate themselves.
'Identity is a hard problem, but it’s by no means an impossible problem. Plus, how imperfect is the current system? It’s entirely broken.'
EMIN GUN SIRER, CORNELL UNIVERSITY
"The idea is to use 'something that you are' or 'something that you have,' coupled with something that the government gives you in order to derive your identity—that way no particular person, neither you nor the government, has sole access to that information," says Nicholas Hayden, director of engineering at the threat intelligence firm Anomali and a cyber warfare officer for the US Air Force. "It’s a way of being able to mutually identify each other that is not 100 percent reliant on the US government."
Some argue that to protect privacy and create a truly robust system, a Social Security number replacement would need to be built on the cryptographic concept of a “zero-knowledge proof,” a mathematical process for proving that a statement is true without any actual information about the assertion itself or its content. Systems would use zero-knowledge proofs to authenticate someone without knowing their identity.
"A fundamental right of a human being is to engage in unlinkable activities," says Emin Gun Sirer, a distributed systems and cryptography researcher at Cornell University. "So if you build an identity registry system that is too powerful, you suddenly find yourself in situations where your activities are always linked. So an identity system should expose linkages where they must legally be exposed—like if I try to get a lot of credit at once. But I should also be able to break that linkage when it need not be there. If I need to prove how old I am to a service, I should be able to just issue them a proof without them knowing anything else about me."
Make It Work
If it all sounds a bit complicated, you're encountering the precise hurdle that has kept a Social Security number replacement from proliferating for decades. Rolling out a new digital identification and authentication framework across government, private institutions, and industry (particularly the sectors that have entrenched reliance on SSNs, like finance and healthcare) would be resource-intensive and inevitably rocky. And that doesn't even begin to address the initial burden on the more than 300 million Social Security number holders in the US, may of whom don't have reliable internet or computer access, who would need to invest time in the transition as well.
And even in light of the Equifax breach, which may have put half of the US population's Social Security numbers at risk, some cryptographers warn that any new system would be dangerous in its own way, because building a new identity scheme on such an enormous scale would inevitably lead to implementation issues that would create new, and perhaps unforeseen, vulnerabilities.
For many, though, these potential downsides don't outweigh the pressing need to replace Social Security numbers as identifiers and authenticators, given the additional security risks US consumers now face in light of the Equifax breach. And though federal initiatives are notoriously slow and accident-prone (the SSA itself only added two-factor authentication to its website in May), the private sector has some immediate options and power.
Third parties can make phasing out Social Security numbers easier by cutting back on collecting them in the first place, and implementing creative (and more secure) identification alternatives wherever possible. There's a lot of low-hanging fruit. For example, even if credit checks still rely on Social Security numbers for years to come, companies could set up digital portals where consumers can easily request and deliver a credit report without ever sharing their SSN with the new institution. Or organizations could collect SSNs for temporary and specific use in an ephemeral way instead of storing them long-term.
"Yes, there are a lot of constraints," Cornell's Sirer says. "Identity is a hard problem, but it’s by no means an impossible problem. Plus, how imperfect is the current system? It’s entirely broken."
Even privacy advocates, professionally skeptical of sweeping claims about identity overhauls, acknowledge the dire need to replace Social Security numbers quickly. "There is a clear need for individuals to be identified and authenticated and there are ways to do it that still preserve privacy," says the ACLU's Stanley, who participated in promoting privacy within NSTIC. "People use the Social Security number because they don’t have anything else. It’s ridiculous."
Seasoned trade line
From Wikipedia, the free encyclopedia
This article is written like a personal reflection or opinion essay rather than anencyclopedic description of the subject . Please help improve it by rewriting it in an encyclopedic style . (December 2010)
A. seasoned trade line is a line of credit that the borrower has held open in good standing for a long period of time, typically at least 2 years. The "seasoned" part simply implies that the account is aged or that it has an established history.
"Piggybacking" Tradelines
"Piggybacking" Tradelines is a practice involving seasoned trade lines, sometimes called piggybacking, which uses a creditworthy borrower's accounts to improve the credit rating of an unrelated third party.
The creditworthy borrower adds the third party as an authorized user of his lines of credit, but does not actually provide the third party with materials (credit cards, account numbers, etc.) that would permit the third party to make charges against that account.
The benefit to the third party is an improvement in their personal credit rating—their credit score increases. However, this does not change their entire credit record, but merely increases their credit score as a result of the newly added tradeline. This may make the third party look like a better credit risk, and may improve the third party's access to new credit. However, a credit score is only one aspect of the lending process; that is, the borrower must pass all underwriting procedures, which include much more than the credit scores of the borrower.
Opponent's Views
Those who oppose the concept of piggybacking would suggest that:
Proponent's views
Those who support the concept of piggybacking would suggest, in response:
Business Model
Legality
There is no cut and dry answer regarding the many questions surrounding the legality of piggybacking, however, there are many sources that tend to indicate perhaps a general answer, such as:
Up Front Fees:
While the legality of piggybacking tradelines seems to remain ambiguous, there is a potential clear violation of federal law, if for example, a piggybacking company takes up front fees from their clients.
Section 404 of the Credit Repair Organizations Act (the "CROA"), states:
"No credit repair organization may charge or receive any money or other valuable consideration for the performance of any service which the credit repair organization has agreed to perform for any consumer before such service is fully performed." [5]
Although the Federal Law appears to be clear, some States, including Florida, have enacted similar and stricter laws, requiring the use of Trust accounts for client funds and a surety bond of $10,000.00 or more. While this is indeed much stricter, it appears to allow for up front fees if the company is bonded and uses a trust account. For example, Section 817.7005, Florida Statutes states, in relevant part:
"...A credit service organization, its salespersons, agents, and representatives, and independent contractors who sell or attempt to sell the services of a credit service organization shall not do any of the following:
(1) Charge or receive any money or other valuable consideration prior to full and complete performance of the services the credit service organization has agreed to perform for the buyer, unless the credit service organization has obtained a surety bond of $10,000 issued by a surety company admitted to do business in this state and has established a trust account at a federally insured bank or savings and loan association located in this state; however, where a credit service organization has obtained a surety bond and established a trust account as provided herein, the credit service organization may charge or receive money or other valuable consideration prior to full and complete performance of the services it has agreed to perform for the buyer but shall deposit all money or other valuable consideration received in its trust account until the full and complete performance of the services it has agreed to perform for the buyer;..."
Piggybacking Risks:
The risk to the "donor" is that the other person might actually make charges against the account, and not pay it back. The brokers who provide this service claim that they do not reveal the entire account number to the recipient, or do not themselves have access to the account number. It is possible a recipient might learn the account number in some other way, for example if it appears on his own credit report . However, this is often insufficient information to make use of the account - a PIN , expiration date, or security code is typically also required. These measures further lower the risk to the "donor".
FICO '08
With FICO 08 on the horizon many brokers who used to add “authorized users” to existing credit card accounts have switched to brokering “Seasoned Primary" accounts. A “primary” account is an account in the borrower's own name. This practice is not yet tested in the courts as the lender now has no way of telling your real credit from that of the former owner who had “seasoned the account”. With an authorized user account the credit report clearly marks the account as authorized user, this new practice however the lender is not alerted to the true status of the account history.
One thing is for sure, Federal Law, such as the CROA and the Federal Reserve Board Regulation B , at least indicates a permissible purpose for adding authorized user tradelines (s
Low credit scores can have far-reaching effects. If you’re shopping around for a mortgage or another kind of loan, a low credit score can lead to a higher interest rate or worse, denial. Some consumers have found a loophole - or so they think.
As an authorized user on someone else’s credit account, the account history appears on yourcredit report. If the account has a positive credit history, you can see a boost in your credit score. If you don’t have a good credit score, adding several of these accounts can increase your score enough to get approved for a loan or offered a better interest rate.
What if there was a way you could pay a fee to “borrow” someone else’s credit information and put it on your credit report? Companies offering such a service are springing up on the internet.
How It Works
You pay the company a fee ranging from a few hundred to a few thousand dollars depending on the number of accounts you want added. You provide your name and social security number. The company finds people with good credit accounts to add you as an authorized user to one or more of their accounts.
Once the credit card company has reported to the credit bureaus, you’re taken off the accounts. The account information is reflected in your credit score and remains on your credit report for seven years. The positive payment history can offset other negative information on your credit report and increase your credit score.
What’s Wrong With This Scenario?
Even though it’s legal – for now – it’s dishonest. When you pass off someone else’s good credit as your own, you’re misleading creditors and lenders. Essentially, you’re telling them that you’ve paid your bills on time, when in reality you haven’t. If you get approved for a loan using these methods, you’ve gained approval under false pretenses.
The credit scoring system is in place for a reason - to give creditors and lenders a system by which they can make sound lending decisions. While there are some exceptions, the credit scoring system is more honest about whether or not you’ll pay your bills than you are.
When you get approved for a loan or credit card without the spending habits to pay on time, it’s very likely that you’ll default and end up hurting the good credit score you paid hundreds, even thousands of dollars to obtain.
Privacy and Security Issues
You have to provide your social security number to be added as an authorized user on the other person’s account. Your social security number lands in the hands of the person who adds you to his (or her) accounts. The way the process works, you don’t know who this person is or how private they will keep your personal information.
Whenever you give out your social security number, there’s a risk that your identity can be stolen. Don’t think that just because you already have bad credit, that additional damage can’t be done with your identity if it’s stolen.
A Better Approach
You may be able to buy good credit (for now), but you can’t buy the spending habits to maintain it. Instead of spending thousands of dollars renting someone else’s good credit, spend that money on improving your own credit. Take inventory of your debts and put together a plan to pay them off.
The discipline you gain through earning a good credit score will benefit you much more in the long run than passing off someone else’s good credit as your own.
Piggybacking Still Effective
This credit repair tactic of faking a good credit history is still effective and available for purchase at www.legalcpn.com contact FULL MONEY back guarantee; and 9x out of 10; will have the tradelines reported within 1-2 weeks always within 30 days!
Add Seasoned Trade Lines to Improve Your Credit Score
The 2007 recession created the housing crisis, historical levels of unemployment, and the stock-market crash on Wall Street. On Main Street, most people could not even relate to the financial complexities that caused the Great Recession. Nor could they understand concepts like the Troubled Asset Recovery Program (TARP), or the National Economic Stabilization Act. What lower middle-class, hardworking person has ever to deal with the idea of 700 billion dollars? I don’t think I have ever said the words themselves more than a few times in my entire life! But even if we could not relate to such concepts, we could relate to not being able to pay our mortgage, or our car payment. For most people, losing a job usually has catastrophic effects upon their lives.
The results of loss of employment can be quite severe; losing your home, losing your car, drastic change in lifestyle. The material things can be replaced over a relatively short time period once a person finds work. However, what cannot be remedied in the short-term by finding work is the damage done to a person’s credit rating. Once that damage is done, it can take years and years of work to regain one’s previous credit standing. And there are no guarantees that a person won’t encounter difficulties repairing their credit as they will have to deal with dishonest, deceitful collection agencies, greedy original creditors, and of course, “the big three” credit reporting agencies – Equifax , Experian , and TransUnion . We all know it’s a lot easier to lower your FICO score than it is to raise it.
From a socio-economic perspective, it seems quite unfair that wrong-headed politics can drive the world’s strongest economy into the worst recession since the Great Depression, cause hundreds of thousands to lose their jobs, then hold them individually responsible for repairing their own credit when they weren’t responsible for what caused their credit score to tank in the first place.
If you are one of the many people who need to improve their credit score or repair their already bad credit, tapping seasoned trade lines is one of the strategies available in the market. Seasoned trade lines are typically revolving lines of credit that have been aged for at least a few years. The age of the trade lines make available a history of on time payments. In addition, seasoned trade lines usually have high limits and low balances. This, debt to credit ratio assists in positively impacting a consumer’s credit score by either expanding the young credit file or lowering the debt to credit ratio previously establish on the report. Historically, businesses investors conducted this practice to improve their credit scores. Now this tool is available to the public.
Using seasoned trade lines to boost credit scores is somewhat controversial. Although financial experts consider it technically legal, some financial experts consider this instrument – when used as a credit repair method – very unethical. Recently, several cities across United States and the Federal Trade Commission have scrutinized this unconventional method, but all conclude that it is legal. A Representative of the Fair Issac Corporation – the company that created the FICO credit scoring system, said at a Congressional hearing that they recognize Authorized User Accounts as legitimate. The value of utilizing AU accounts or seasoned trade lines is that they produce very fast results. Following the normal procedures, it would take the average person at least 3 to 5 years to significantly improve their FICO score. This is because trade lines have to “mature” to add points to your credit score. It is also important to add different types of credit to your file; revolving accounts such as credit cards, installment accounts such as payments that do not change every month like a car, or a bedroom set. Trade lines can be purchased for each of those types of accounts.
Rebuilding your credit is a very slow process, especially if you start with a score somewhere in the 500′s. Purchasing a trade line will cost you some money, but the pay-off is more than worth the price. Whatever the reason you would consider buying a seasoned trade line make sure you check out the company thoroughly, and do your due diligence!
Here’s exactly how trade lines work:
Adding a seasoned trade line with a significant limit, low balance, and lots of history will certainly help any credit score. However, the question is… based on the particulars of a given credit report , to what extent will the seasoned trade line help? If your credit report shows a significant number of derogatory items such as charge-offs, collection accounts, late payments, etc., the impact of the season trade line will be less than in the case of the credit file with relatively no history (and especially limited or no negative history). The number, history and status of these credit trade lines comprise a large part of a person’s credit score.
Credit bureaus such as Experian, TransUnion, and Equifax look at the amount of open trade lines, the payment history on the accounts, how long the account has been open and how long since the last activity on an account to determine an individual’s credit score. To build positive credit history a person generally should strive to have approximately 3-5 active trade lines that are “seasoned,” meaning the accounts have been open for around 2 years, have positive payment history on all accounts and the accounts should be current and in good standing.
Lines of credit that are in the name of the primary account user are called primary trade lines. For example, if Borrower A opens a credit card in his name, Borrower A is considered the primary account user and the credit card account is considered a primary trade line. If Borrower A added Borrower B onto the credit card account as an authorized user, Borrower B would be considered a secondary account user and this would be considered a secondary trade line for Borrower B. Authorized users on accounts are generally not responsible for re-paying any debt incurred on the account as the primary and/or joint account holder would.
Trade lines have a significant impact on a consumers FICO score. For that reason, businesses that sell access to seasoned trade lines to customers who are looking to improve their credit score have increased dramatically in recent years. These businesses find and pay people with good credit who are willing to add other authorized users onto their seasoned and positive credit accounts.
Customers looking to build their credit pay these businesses for the ability to be added as secondary authorized users on these established accounts. This practice is often known as “piggybacking.” In theory, the positive history of these trade lines help increase the credit score of the borrower with negative credit history, since these trade lines are reflected on both the credit history of the primary holder and on the secondary holder as well. This was generally done with parents adding their children as secondary users on their accounts to help their children build credit. However the practice of selling seasoned trade lines, while legal, is considered controversial and can be a risky endeavor..
This method is plagued by legal controversies. Privacy laws and the Fair Credit Reporting Act make it impossible for lenders to identify whether a user is related to the primary account holder or not. Financial experts admit this is technically legal but can be used “unethically”. Credit score companies are taking some steps to halt the growing usage of this method. In fact, Fair Isaac Corporation temporarily changed their scoring algorithm to effectively stop considering “authorized users” in their FICO scoring model, but because of the privacy protection language of the Equal Credit Opportunity Act, they reversed their decision and currently acknowledge authorized users as legitimate.
WHAT THE FTC SAYS:
FTC spokesman Frank Dorman said: “What I’ve gathered from attorneys here is that it is legal, however, the agency is not saying that it is legal technically.” Other law enforcement agencies, like the Florida Attorney General’s Office, are reviewing whether such activities are legal. A report published by the Federal Reserve Board reported “This is possible because creditors generally have followed a practice of furnishing to credit bureaus information about all authorized users, whether or not the authorized user is a spouse, without indicating which authorized users are spouses and which are not. This practice does not violate Reg. B.” In a written statement from Fair Isaac Corporation on credit scoring models and credit score before the U.S. House of Representatives Committee on Financial Services, Subcommittee on Oversight and Investigations, Tom Quinn, Vice President of Global Scoring Solutions for Fair Isaac Corporation, stated: “After consulting with the Federal Reserve Board and the Federal Trade Commission earlier this year, Fair Isaac has decided to include consideration of authorized user trade lines present on the credit report…”
What’s in it for people with good credit? They are paid $100 to $150 for every account they authorize as primary accounts to another user. Some seasoned trade line companies lure many people with good credit by promising that they can earn more than $10,000 per month without doing anything. This method has existed for many years but did not gain much popularity until now. Most of the time it is used by students who piggyback with their parent’s credit cards. The subject of controversy is whether it is unethical to let other people use your good credit so they can convince lending companies to approve their loans or mortgages. A simple Internet search will reveal numerous online businesses, offering this service to the public. While there are some legit seasoned trade lines groups, the number of scammers is significantly growing. One common aspect among the less legitimate companies is the promise to improve credit scores literally overnight. If you are seriously considering purchasing a trade line to increase your credit score,.
It is understandable why many people with low credit scores decide to purchase seasoned trade lines and pay fees ranging from $700 to $5000; A good credit score can literally change your life. It can lower your interest rates, allow you to buy a new home, get better insurance, or take the vacation of your dreams. It can also help you attain a high-paying job that requires a good credit rating. On the side of cardholders with good credit reputation, there is no risk involved in putting their good credit “up for sale” because the authorized user does not have access to the credit card, or the cards’ account number.
Will FICO Keep Authorized User Accounts
Fair Isaac has changed its mind about removing piggybacked accounts from the FICO score equation.
In 2007, Fair Isaac announced a new credit scoring model - FICO 08 - that would no longer consider authorized user accounts. This decision came on the heels of the mortgage meltdown. You see, many consumers who had bad credit scores, bought better credit scores by paying to be added to someone else's positive credit account. When you're an authorized user on an account, the account's entire history appears on your credit report and is calculated in your credit score. So, some consumers, who wouldn't have otherwise qualified for a mortgage, paid their way to application approval.
In a prepared testimony, Tom Quinn, Vice President of Global Scoring Solutions for Fair Isaac Corporation states:
"After consulting with the Federal Reserve Board and the Federal Trade Commission earlier this year, Fair Isaac has decided to include consideration of authorized user tradelines present on the credit report in the FICO 08 model. Our scientists have devised a method to consider these tradelines while materially reducing the negative impact that could arise from piggybacking."
Fair Isaac still plans to roll out FICO 08, though no dates have been communicated.
FICO 08 will score authorized user accounts
By Leslie McFadden • Bankrate.com
Highlights
Last week Fair Isaac announced that its latest credit-scoring model, dubbed "FICO 08," will include authorized user accounts when calculating someone's FICO credit score.
The company estimates that 50 million consumers are "legitimate" authorized users on someone else's credit card. Legitimate authorized users have a relationship with the primary accountholder and a reason to share access to the account, such as spouses, and parents and children.
FICO 08 was originally designed to ignore authorized user accounts, in an effort to stem "piggybacking" on a stranger's credit card and artificially inflating one's score. (Editor's note: All previous stories describing the design of FICO 08 to exclude authorized user accounts were based on information that is now outdated. At the time of this writing, FICO 08 will include authorized user accounts in scoring.)
Previous versions of the FICO scoring model included authorized user accounts in scoring. Some credit repair firms exploited that loophole, and offered a way for folks with bad credit to raise their FICO scores. The consumer would pay thousands of dollars to get added as an authorized user to the credit card of someone with a stellar credit history. When that account showed up on the authorized user's credit report, the person's credit score would rise. Typically, the authorized user would not receive a credit card. Rather, the consumer paid to get a credit score boost.
Why the change
Fair Isaac said lenders complained that using FICO 08 would inhibit compliance with Federal Reserve Regulation B, which requires lenders assessing a married person's credit risk to consider the credit history of accounts shared by the spouses.
Fair Isaac is keeping the specifics of their new analytic approach secret but says they've found a way to restore authorized-user accounts to the formula but also reduce the impact of piggybacking.
"The FICO 08 scores of legitimate authorized users will now reflect the information on their credit reports about the account(s) on which they are authorized users," says Tom Quinn, vice president of global scoring solutions for Fair Isaac.
A competing scoring model called VantageScore, which was created by the three major credit reporting agencies, has never considered authorized-user accounts in its scoring. "VantageScore excludes authorized-user trade lines, whether with good or bad payment histories, to ensure the risk assessment of a credit applicant represents the true credit risk of the prospect and not the originating borrower with whom the authorized trade line is associated," says Barrett Burns, president and CEO of VantageScore Solutions.
Burns says VantageScore complies with Regulation B since "lenders do not have to consider the credit history of spousal authorized users unless the information is available." Credit reports don't indicate the existence of a spousal relationship between authorized user and account holder.
How the change impacts you
Fair Isaac's announcement should please consumers whose credit history largely consists of authorized-user accounts. "The millions and millions of consumers who would've seen their scores go down are not going to see that happen," says John Ulzheimer, president of Credit.com
educational services.
Read more: http://www.bankrate.com/finance/credit-debt/fico-08-will-score-authorized-user-accounts-1.aspx#ixzz2TmOeKlY3
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FICO 08 will score authorized user accounts
By Leslie McFadden • Bankrate.com
He estimates about 1 percent of U.S. consumers, or between 2 million and 2.5 million, would have ceased to have FICO scores if FICO 08 had been rolled out the way it was.
It could be a long wait before consumers can obtain their FICO 08 scores. Quinn says Fair Isaac is still revising the model with the three major credit reporting agencies, after which the company will focus on getting lenders to test and use FICO 08. He says it's too early to speculate on when consumers will get access to their new scores.
Pros and cons of authorized users
If piggybackers were gaming the system, could people still do so by getting a family member with great credit to add them as an authorized user?
Asked about legitimate authorized users inflating their FICO scores in this way, Quinn responded in an e-mail: "The innovation we are adding to the FICO 08 model will help control for the kind of score tampering you describe. The details of how it works must remain confidential."
It remains to be seen how people with otherwise low scores will benefit from their authorized-user accounts after FICO 08 is in place.
Authorized-user accounts aren't a cure-all, though, cautions Curtis Arnold, founder of CardRatings.com and author of "How You Can Profit from Credit Cards." He says credit scores look at many factors and there are bigger components to worry about.
Authorized user accounts do impact your FICO scores, but they aren't a major factor in and of themselves. Here's a look at what influences your FICO scores:
Elements of your credit score
Source: myFICO.com
Being either an authorized user or a primary accountholder carries some risk. Authorized users could see their credit score plummet if the primary cardholder defaults on that account. Primary cardholders are liable for any debt incurred by the authorized user, and high balances could damage their credit scores.
Issuers must report authorized-user information when the authorized user is the accountholder's spouse, thanks to the Equal Credit Opportunity Act of
1974. Issuers decide whether or not to report payment history data for other authorized users.
Arnold suggests the primary accountholder call and ask the issuer if authorized-user data gets reported.
If the issuer doesn't report authorized-user information when that person is not a spouse, it could make sense to add the other person as a joint accountholder. Doing that, however, makes both parties responsible for debt acquired by either party.
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In 2007 there was a lot of talk about the end of authorized user credit also known as piggyback credit, as a means to boost credit scores. The benefits of becoming an authorized user is the primary account holder’s credit can improve the authorized user’s credit scores and help build a solid credit history. Fair Isaac Corporation (FICO) announced they were rolling out a new credit scoring model that did not factor in authorized user accounts. Traditionally authorized user accounts have been used when spouses add one another to their already established credit accounts or parents add their children to their accounts. But companies began to emerge that offered authorized user accounts for a price.
A primary account holder would allow a limited number of unknown authorized users to be added to their good credit accounts and the company would pay the primary account holder a fee for brokering these deals. Very similar to “renting out” your good credit for a limited term and getting paid for it. The authorized user would not actually get use of the credit account; however, they would get the benefits of the primary account holder’s good credit history. FICO considers this practice as misrepresenting a consumer’s credit risk to lenders. The authorized user would be added for a short period of time in order to add a quick boost to their credit scores. Some of the primary accounts would be more than 20 years old with excellent payment history and very low balances — something FICO scoring looks kindly upon. According to Fair Isaac Corporation, there are more than 50 million authorized user account holders. The industry of purchasing authorized user accounts began to get negative attention; and in response to the growing use of renting accounts, Fair Isaac Corporation developed a new scoring model that did not include authorized user accounts in the scoring formula.
FICO 08 was originally set to begin some time in 2008 and all the major credit bureaus were to begin using the new scoring model. However, critics have expressed that if FICO 08 were enforced without the use of authorized buyer credit, it would be in violation of the Equal Credit Opportunity Act. The Equal Credit Opportunity Act requires lenders to consider a spouse’s credit history when determining the credit risk of a borrower. If authorized user credit were abolished it would have prohibited lenders from complying with the Equal Credit Opportunity Act. Fair Isaac Corporation revised FICO 08 to simply FICO 8 which includes the use of authorized user accounts; however, they now say it has a way to recognize the abuse of authorized user accounts. It only made sense for FICO 8 to continue authorized user credit or “piggyback credit” because every generation of the FICO score formula has included authorized user credit card accounts when calculating a person’s score. FICO 8 score continues that policy. Authorized user credit continues to benefit consumers with shared management of a credit card account. It also helps lenders by providing scores that are based on a full snapshot of the consumer’s credit history. FICO 8 does says it “substantially reduces any benefit of so-called tradeline renting.” Stay tuned for further develops, but for now, it looks as though authorized user and piggyback credit is still a viable option in boosting credit scores
“I think it’s really clear there needs to be a change,” White House Cybersecurity Coordinator Rob Joyce said at the Cambridge Cyber Summit last week. “It’s a flawed system. If you think about it, every time we use the Social Security number you put it at risk."
Joyce added that a federal task force is examining possible replacements. Companies like Legal CPN are about 50 years ahead of the system; their research has shown with each and every client that the financial system based on social security numbers is a flawed manipulatable system. This is something we must change.
I agree with their recommendation that we should move toward a more individualized number for each individual on the planet based on 1 person 1 number. This is necessary for national security, border security and will enable the financial system to thrive. Consider a world where banks lend money; and then isolate the debt to one person or one business hedging their loan or investment against default.
Nowadays, if someone defaults on a debt, they can the same day; purchase a CPN, go to the IRS website, list a new business, generate a new EIN, open a new bank account under a new LLC, and proceed as if nothing ever happened. The system is broken and needs to be changed.
Most fixes suggested for updating the SSN system are either technologically untested, expensive to implement or both.
Nov. 4, 2018, 7:36 AM EST
By Brandi Vincent
At a recent panel on modernizing Social Security numbers, Candace Worley, vice president and chief technical strategist for cybersecurity firm McAfee, laid out the core problem with the national identity system that has been in place since 1936.
“You can’t have 80 percent of your numbers compromised and continue to consider it a secure form of identity,” Worley said.
Social Security Numbers, or SSNs, remain an integral part of how Americans and U.S. residents are identified for everything from opening bank accounts and applying for loans to enrolling in Medicare and filing taxes. But a series of major data breaches in the past decade have exposed the Social Security numbers of almost 158 million Americans, opening a large majority of the country to the risk of identity theft.
Those breaches have pushed privacy advocates and politicians to call for a new system.
“Time is of the essence,” Rep. Sam Johnson, R-Texas, chairman of the House Social Security Subcommittee, said. “We must promptly evaluate options and begin putting in place those that will best protect Americans from identity theft.”
The problem is well-recognized, but the solution is not. Experts and politicians have warned that the SSN system is badly in need of an update, but there is little consensus on just what should be done. Most solutions are either technologically untested, expensive to implement or both.
One of the most common suggestions for updating SSNs is moving the U.S. to a “smart card” system, like the one suggested in a recent report from the Center for Strategic and International Studies, or CSIS, a nonprofit research organization that aims to provide solutions for current and emerging foreign policy and national security issues.
“The simplest approach to modernization would be for the U.S. to transform the venerable Social Security Card into a ‘smart card,’” which would be a plastic card with a readable chip, similar to modern credit cards, the report states. Under that system, Americans would use two numbers — an encrypted SSN and a “proxy” number that would link the smart card and could be changed if compromised.
James A. Lewis, senior vice president at CSIS and author of the report, said that smart cards offer the most attractive approach for the immediate future because they build on existing technology and involve a widely adopted embedded chip that people are already comfortable using in credit cards. They would also enable an incremental approach to modernization that could curtail inevitable hiccups along the way.
Others aren’t optimistic about smart cards. Paul Grassi, an identity and cybersecurity expert who served as senior standards and technology advisor at the National Institute of Standards and Technology, a non-regulatory agency that develops technical standards, said smart cards aren’t a good solution.
“Giving me a smart card does nothing unless the entire global infrastructure of global institutions is changed to be able to interact with a smartcard,” Grassi said. “It’ll never happen. The cost would be too astronomical.”
Joe Stuntz, principal of cybersecurity at One World Identity, a digital strategy consultancy focused on trust and the data economy, also said the smart card plan was too expensive. “I can’t see a budget environment where this gets prioritization over some of the other things that need to be funded in terms of cybersecurity or identity,” Stuntz said.
SSN reform is also running short on champions in the U.S. government. Johnson is retiring at the end of his term, and Rob Joyce, the White House cybersecurity coordinator who called for ideas for SSN replacements, left the administration in May — and his position was eliminated.Apparently this country knows that the fast integration methods for illegal immigrants are CPN numbers, and the seamless ways illegals can enter our financial system are also CPN numbers. They do not want to fix the broken system where America and the banking industry can thrive. According to my personal belief, they want or need a broken system so that thousands of illegal immigrants can purchase or create new 9 digit numbers and integrate themselves into the American financial systems.
The identity and verification needs filled by SSNs are also problems that a variety of nascent technologies including biometrics and blockchain theoretically solve, leading some to hope that the best solution for national identity is yet to come.
But Stuntz, who previously ran smartcard programs for the federal government, said a cheaper, more viable solution could be found in something most Americans use daily: smartphones, which already have authentication and verification apps for private services.
“When smartphones have secure environments that could hold this type of information and be more accessible, I don’t think the cost of a smart card is justified in that report,” Stuntz said.
As for biometrics and blockchain, Grassi said that both need to answer major questions before they could be used to upgrade or replace the SSN system, including making sure they’re secure and easy to use.
And the U.S. national identity system, Lewis said, is not a place to test out new technology.
“This will eventually change,” Lewis said. “But making the SSN the testbed for a deployment involving hundreds of millions of individuals would create the risk of turmoil in the U.S. economy.”
Do You Need an EIN?
You will need an EIN if you answer "Yes" to any of the following questions. For your convenience, clicking on the "Yes" option will take you directly to How to apply for an EIN.
Daily Limitation of an Employer Identification Number
Effective May 21, 2012, to ensure fair and equitable treatment for all taxpayers, the Internal Revenue Service will limit Employer Identification Number (EIN) issuance to one per responsible party per day. This limitation is applicable to all requests for EINs whether online or by phone, fax or mail. We apologize for any inconvenience this may cause.
Do you have employees?
NO
Do you operate your business as a corporation or a partnership?
NO
Do you file any of these tax returns: Employment, Excise, or Alcohol, Tobacco and Firearms?
NO
Do you withhold taxes on income, other than wages, paid to a non-resident alien?
NO
Do you have a Keogh plan?
NO
Are you involved with any of the following types of organizations?
NO
Do You Need a New EIN?
Generally, businesses need a new EIN when their ownership or structure has changed. Although changing the name of your business does not require you to obtain a new EIN, you may wish to visit the Business Name Change page to find out what actions are required if you change the name of your business. The information below provides answers to frequently asked questions about changing your EIN. If, after reading the information below, you find that you need an EIN, please seeHow to Apply for an EIN.
Sole Proprietors
You will be required to obtain a new EIN if any of the following statements are true.
You will not be required to obtain a new EIN if any of the following statements are true.
Corporations
You will be required to obtain a new EIN if any of the following statements are true.
You will not be required to obtain a new EIN if any of the following statements are true.
Partnerships
You will be required to obtain a new EIN if any of the following statements are true.
You will not be required to obtain a new EIN if any of the following statements are true.
Limited Liability Company (LLC)
An LLC is an entity created by state statute. The IRS did not create a new tax classification for the LLC when it was created by the states; instead IRS uses the tax entity classifications it has always had for business taxpayers: corporation, partnership, or disregarded as an entity separate from its owner, referred to as a “disregarded entity.” An LLC is always classified by the IRS as one of these types of taxable entities. If a “disregarded entity” is owned by an individual, it is treated as a sole proprietor. If the “disregarded entity” is owned any any other entity, it is treated as a branch or division of its owner.
Changes affecting Single Member LLCs with Employees
For wages paid on or after January 1, 2009, single member/single owner LLCs that have not elected to be treated as corporations may be required to change the way they report and pay federal employment taxes and wage payments and certain federal excise taxes. On Aug. 16, 2007, changes to Treasury Regulation Section 301.7701-2 were issued. The new regulations state that the LLC, not its single owner, will be responsible for filing and paying all employment taxes on wages paid on or after January 1, 2009. These regulations also state that for certain excise taxes, the LLC, not its single owner, will be responsible for liabilities imposed and actions first required or permitted in periods beginning on or after January 1, 2008.
If a single member LLC has been filing and paying employment taxes under the name and EIN of the owner, and no EIN was previously assigned to the LLC, a new EIN will be required for wages paid on or after January 1, 2009. If a single member LLC has been filing and paying excise taxes under the name and EIN of the owner and no EIN was previously assigned to the LLC, a new EIN will be required for certain excise tax liabilities imposed and actions first required or permitted in periods beginning on or after January 1, 2008. The following examples may assist in determining if a new EIN is required:
You will be required to obtain a new EIN if any of the following statements are true.
You will not be required to obtain a new EIN if any of the following statements are true.
Estates
You will be required to obtain a new EIN if any of the following statements are true.
You will not be required to obtain a new EIN if any of the following statement is true.
Trusts
You will be required to obtain a new EIN if any of the following statements are true.
You will not be required to obtain a new EIN if any of the following statements are true.
To ensure fair and equitable treatment for all taxpayers, the IRS issues only one EIN per responsible party per day. This limitation is applicable to all requests for EINs, whether online, by telephone, fax, or mail. We apologize for any inconvenience this may cause. Only individuals with taxpayer identification numbers can apply for an EIN as the responsible party. https://www.irs.gov/taxtopics/tc755 .
According to the IRS's own definition, they permit and recognize that you can start and grow a new business every single day. I'm confident that the haters who will be listening to every word we say here at home or at work will conclude that we are correct thus far. Now keep in mind that by saying you can start a new business every day, they are accepting that you can get a new EIN, start a new business, open a bank account, and do everything else that comes with it, including creating a new credit profile. You can own 365 distinct credit profiles, EINs, and new businesses in any given year, to put it briefly.
One of the most common question we receive is, "How many credit profiles can you legally own?" The right response, which the haters love to hate, is that you have the right to as many credit profiles as you want. As long as your legal cpn is properly developed you can own as many as you like. That is not a question that is A FACT. This is reality.
We recognize that in today's environment, everyone wants to spread a lie and that personal morality seems to weigh more heavily and override the law and even the framework of our own constitutional rights. This is dangerous to see media companies, google, facebook, small franks opening hold lies and sponsor non truths.
You can see these voices some large some small; sponsor lies, promote non-truths, and feature outright exaggerations and non-truths listed in Google Search, Facebook, and promoted in the media every single day.
In conclusion, CPNs are legitimate. Credit profiles are legitimate. These are undisputed facts.
To the haters, we say: So what if you don't like the truth; does that mean you have the right to try to conceal anything you don't like? Can we keep our disliked voices, religions, businesses, viewpoints, and ethnicities hidden?
We have long been proponents of the status quo being changed. Change the law or implement a system where each person only has one credit profile if you don't like how someone may open a new credit profile each day and escape negative credit that is found on one credit profile.
The critics will assert that you are only allowed to have one credit profile number, and the IRS will counter that and say, "you are permitted one EIN per day, thus resulting in 365 new credit profile every year if you choose to develop a new legal business every single day." No one knows this subject better than us; we are the leader,15 years experience and 1 million clients later, we understand cpn's better than anyone. The honest arbitrator of truth; and we challenge anyone to dispel this article.
First, let's explain what a CPN is.
CPN stands for Credit Privacy Number sometimes it's referred to as SCN which stands for Secondary Credit Number. It is a 9 digit number for identification purposes similar to that of a Social Security Number.
Everybody has the right to keep their Social Security Number private. The only time you cannot provide your CPN when an SSN is requested is if the Internal Revenue Service asks, employers, for any mortgage loans, a federally insured loan or purchasing a firearm. (according to the FBI.gov website)
You can, however, provide your CPN in all other cases such as building credit, an apartment lease, or any other instances other than a government agency such as a creditor.
CPNs are commonly used by members of Congress, celebrities, victims of identity fraud, those in a witness protection program or those simply wanting to protect their SSN.
If you look at the above examples, the commonality is that they all want to protect their SSN for being misused. A member of Congress wouldn't want the media or a political enemy having access to their credit or SSN. Celebrities use for anonymity. Victims of identity fraud don't want their SSN information in the hands of people just trying to get loans/credit under their name.
There are black markets that sell this information and is a growing market, unfortunately. Someone in the witness protection program in fear of their life would not want their SSN as you can track someone with this which CPNs are harder to. CPNS are a great legal way to protect yourself and your SSN.
Why do CPNs get a bad rep?
CPNs have a bad reputation or a negative connotation as being illegal, fraud, or scammy. You can't even search CPN numbers or SCN numbers on Google without fraud or scam auto-populating. 90% of those articles are absolute lies pushed and promoted by Google. The Law clearly states CPNs are perfectly legal; according to Title 5, Section 7 of Publication Law 93-579 of Government Organization and Employees Act.
What is illegal can be how you intend on using it. The problem is "they," do not want the average Joe to be able to obtain a viable new credit profile whenever they want. In America, the money and power are holding people and opportunities away from certain people.
For example, if you obtain a CPN for the purpose of taking out loans or credit cards and not intending to pay them back; then of course you are committing fraud.
According to the FBI.gov website, it states that you are responsible for any debt incurred under a CPN. https://www.fbi.gov/stats-services/publications/mortgage-fraud-2008
Sounds corny but use the analogy of a gun. Guns are not illegal but what is illegal is how you intend on using the gun. Use the CPN for your protection and just have the self-discipline not to use it for any negative purposes or think to defraud your new lender.
What's great about a CPN is that you get to protect yourself by not giving out your SSN. They say knowledge is power so now that you are informed; just have enough willpower to use a CPN in a correct and legal way.
34
A FICO score is a credit score that determines the likelihood that credit users will pay their bills. The score is developed using models and mathematical tables that assign points for different elements or pieces of information that best predict future credit performance. FICO scores range from 300 to 850, and are calculated based on payment history, balances owed, length of credit history, types of credit used, and new credit history. FICO 08––introduced in the latter part of 2008––is a new scoring formula designed to more accurately predict loan defaults. One of the primary purposes of FICO 08 was to eliminate the practice of “piggybacking.” This occurs when individuals are permitted to add authorized users on their credit accounts to boost their credit scores. Many lenders have opposed this change because it inhibits compliance with Federal Reserve Board regulations and hinders authorized users, such as wives and college students, from establishing or maintaining a credit rating.
35
Credit Privacy Numbers (CPNs) are nine-digit file numbers that follow the same algorithm as Social Security
Account Numbers (SSANs). Currently, federal law allows individuals to legally use CPNs for financial reporting and protects those individuals who do not wish to disclose their SSAN. Individuals who acquire CPNs are completely responsible for any debt they incur using this number.
36
Seasoned trade lines are lines of credit that are held open in good standing for an extended period of time, typically for at least two years.
37
FBI Intelligence Assessment, Credit Enhancement Schemes Used to Circumvent Tight Lending Practices, 13 March 2009 (UNCLASSIFIED).
https://www.fbi.gov/stats-services/publications/mortgage-fraud-2008