Why do lending and credit card companies use a borrower's Social Security number when opening an account? To ensure borrowers are US citizens To protect against fraud To withdraw taxes To assign an interest rate

Lending and credit card companies use a borrower’s Social Security number primarily to protect against fraud. By verifying the SSN, they can confirm the identity of the applicant, ensuring that the person applying for credit is who they say they are. This helps mitigate risks associated with identity theft and fraudulent applications, allowing the company to make informed lending decisions. Additionally, the SSN serves as a way to track a borrower’s credit history through credit reporting agencies. This allows lenders to assess the applicant's previous borrowing behavior and creditworthiness, which plays a direct role in assigning an appropriate interest rate and ensuring that they are lending to reliable borrowers. Without this information, lenders would face greater uncertainty in their lending decisions.