Hundreds of “credit hackers” are legally gaming financial institutions by taking advantage of loopholes in the U.S. credit-reporting system, a security researcher says — warning that identity thieves could follow suit.

Christopher Soghoian, a fellow at Harvard’s Berkman Center, took a security expert’s eye to the tricks already in use by a healthy subculture of clever consumers who have managed to garner zero-interest loans and erase some information from their credit profiles. He’s presenting his findings Saturday at the DefCon hacker convention.

“The techniques outlined in this paper are not traditional hacking,” he said in an interview. “All that is being done is taking advantage of the formalized structure of the process.”

In his paper (.pdf), Soghoian highlights several approaches perfected by the credit hackers.

In one ploy, the consumer generates a massive amount of quick credit by carefully timing simultaneous applications from different lenders. This takes advantage of the fact that it takes several days for an inquiry to appear on a consumer’s credit report, leaving issuing banks blind to the parallel applications.

Read more at: WIRED Magazine

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{Photography by Ted Percival}