How does replacing ITIN with SSN affect your credit?

This post originally appeared May 3, 2018 on CreditCards.com as “Can immigrants transition from ITIN to SSN without hurting their credit score?”

By Barry Paperno

Dear Speaking of Credit,
I just received my Social Security number and I have a couple of credit cards where I use my Individual Taxpayer Identification number.

I want to check if calling the credit card companies and updating my information helps, and also if my credit score will transfer or will be affected somehow?

Will the credit card companies accept this or will they ask me to reapply? Thanks. – Carlos

Dear Carlos,
You’re clearly thinking on your feet here, knowing how strongly our Social Security numbers (SSNs) link to the credit information – including balance, credit limit and account age – that directly determines the content of our credit reports – which in turn determine our credit scores.

Let’s look then at whether you have reason to be concerned about any impacts to your credit picture once your Individual Taxpayer Identification number (ITIN) has been converted to your new Social Security number, along with some credit-protecting steps to take.

How your creditors and credit bureaus use your ITIN/SSN
While clearly an important piece of the personally identifiable information that helps companies know who you are, you might be surprised to know that the Social Security number’s importance as a driver of credit reporting and scoring accuracy is often overstated.

That is, while certainly an important component connecting your credit information to you, your Social Security number is not the only piece of the puzzle – or even the most influential of the most common identifiers in credit reporting.

While Social Security numbers are commonly thought to be an absolute must for reporting credit and collection accounts to the credit bureaus, this is simply not true.

Why? For one thing, as with any other shared piece of information, Social Security numbers can be reported wrongly, just like names and addresses.

This is why no single piece of identifying information is relied upon exclusively to determine a consumer’s identity.

What are the ‘big 4’ personal identifiers?
Not only is a Social Security number not a requirement for all credit reporting, but it only tends to comes in at third place within the hierarchy of the four most critical pieces of personally identifiable information that determine whether an account lands on your credit report or doesn’t.

Listed in order of importance, the following four personal identifiers typically help define who you are to your creditors and credit bureaus.

Interestingly enough, only the first two – name and address – are always required in credit reporting:

  1. Name
  2. Address (current/previous)
  3. Social Security number (or Individual Taxpayer Identification number)
  4. Date of birth

When the personally identifiable information accompanying the credit information submitted to the credit bureau matches what the credit bureau files show, that information is then included in the consumer’s credit report.

If no such match can be made, that data are simply left off the credit report.

Whom to notify about your new Social Security number
Now that you have a feel for the role Individual Taxpayer Identification numbers, Social Security numbers and other personal identifiers play in creating your credit report, taking the following steps will go a long way toward ensuring the completeness and accuracy of your credit picture.

  • Notify the IRS.
    First, be aware that the IRS requires you to notify it of your new Social Security number to make sure your prior tax return information is joined with all future returns.Second, upon doing so, your taxpayer ID number will be rescinded and considered invalid for any other purpose.For these reasons, provide the IRS with photos of both your taxpayer ID and Social Security cards.
  • Notify your creditors.
    One piece of good news in this major hassle is that you won’t have to reapply for any of your existing credit accounts.Once you notify each lender and card company of this change, your creditors will simply replace the ITIN with the SSN in both their internal records and the data they send to the credit bureaus.
  • Notify the credit bureaus.
    Providing your taxpayer ID number and new Social Security number to each of the big three credit bureaus – Equifax, Experian and TransUnion – will give them the correct identifying information with which to match against submissions from creditors and other bureau subscribers.

How to confirm accurate transition from ITIN to SSN
Before considering all of your work done, however, give this process about three months before taking the last step.

That is, obtain your credit reports from each of the big three credit bureaus by visiting AnnualCreditReport.com, where each bureau’s report is free once a year, to make sure that:

  • Your credit report thoroughly and correctly includes your new Social Security number.
  • Your complete credit history is present and accounted for on all of your credit reports.

If you find the wrong Social Security number, accounts that don’t belong to you or any missing credit history, dispute each error with both the credit bureau and the appropriate creditor:

Provide a photo of the new Social Security card and another piece of identifying information – utility bill showing your name and address, for example – with your dispute to leave no doubt that you are who you say you are.

Accurate credit report = accurate credit score
How does your credit score fit into this process? For your situation, there is simply not much in the way of specifics about your credit score to address.

Based strictly on your credit information on file at the bureaus, your score will always be as accurate as the information in your credit report.

Therefore, with all of your credit accounts and reports in order, there will be nothing about this transition from taxpayer ID to Social Security number that should leave any cause for worry about impacts to your credit score.

Good luck!

2 thoughts on “How does replacing ITIN with SSN affect your credit?

  1. Lynn Daniels

    Fico 8 version not the same as mortgage fico scores 2,4,5 What is the key to improving mortgage fico scores 2,4,5 and I know its not improving utilization of revolving credit. What is the key to improving mortgage scores.

    Reply
    1. Barry Paperno Post author

      Hi Lynn,

      While true that the mortgage industry has not (yet?) adopted the FICO 8 score version, for most consumers what’s true for FICO 8 scores will also be true for the older versions used in mortgage lending: Experian 2, TransUnion 4 and Equifax 5. That is, paying on time, low credit card utilization and few new account openings continue to be the way to a good score with all score models.

      Keep in mind that while these older scores continue to be used for mortgages, they were constructed in much the same way as the later FICO 8 and FICO 9 scores, and were used in all kinds of lending back in their day. What tends to differ among score versions, and across the bureaus using the same version, are the points associated with many of those same score factors that have been used in all of these modes and by all three bureaus since the late 1980s.

      Finally to your question, I have to disagree with you about revolving utilization. No matter what score is being used, other than paying on time, the best thing you can do to raise your mortgage score, or any score, is to lower any revolving utilization over 10%, while not opening any new accounts. If you’re already doing all that, only the passage of time while continuing to do the above is the key.

      Hope that answers it. Let me know if not or if you have any other questions or comments. Thanks for writing!

      Barry

      Reply

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