Password cracking is the process of recovering              secret passwords from data that has been stored in or transmitted              by a computer system. A common approach is to repeatedly try guesses              for the password.
Most passwords can be cracked by using following techniques : 
1) Hashing :-              Here we will refer to the one way function (which may be either an              encryption function or cryptographic hash) employed as a hash and              its output as a hashed password.
If a system uses a reversible function to obscure stored passwords,              exploiting that weakness can recover even 'well-chosen' passwords.              
One example is the LM hash that Microsoft Windows uses by default              to store user passwords that are less than 15 characters in length.              
LM hash breaks the password into two 7-character fields which are              then hashed separately, allowing each half to be attacked separately.
2) Guessing :- Many passwords              can be guessed either by humans or by sophisticated cracking programs              armed with dictionaries (dictionary based) and the user's personal              information.              
Not surprisingly, many users choose weak passwords, usually one                related to themselves in some way. Repeated research over some 40                years has demonstrated that around 40% of user-chosen passwords                are readily guessable by programs. Examples of insecure choices                include:
* blank (none) 
* the word "password", "passcode", "admin"                and their derivatives 
* the user's name or login name 
* the name of their significant other or another person (loved one)
* their birthplace or date of birth 
* a pet's name 
* a dictionary word in any language 
* automobile licence plate number 
* a row of letters from a standard keyboard layout (eg, the qwerty                keyboard -- qwerty itself, asdf, or qwertyuiop) 
* a simple modification of one of the preceding, such as suffixing                a digit or reversing the order of the letters. 
and so on....
In one survery of MySpace passwords which had been phished, 3.8                percent of passwords were a single word found in a dictionary, and                another 12 percent were a word plus a final digit; two-thirds of                the time that digit was.
3) Default Passwords                :- A moderately high number of local                and online applications have inbuilt default passwords that have                been configured by programmers during development stages of software.                There are lots of applications running on the internet on which                default passwords are enabled. So, it is quite easy for an attacker                to enter default password and gain access to sensitive information.                A list containing default passwords of some of the most popular                applications is available on the internet.
4) Brute Force :-               If all other techniques failed, then attackers uses brute force                password cracking technique. Here an automatic tool is used which                tries all possible combinations of available keys on the keyboard.                As soon as correct password is reached it displays on the screen.This                techniques takes extremely long time to complete, but password will                surely cracked.
5) Phishing :-                This is the most effective and easily executable password cracking                technique which is generally used to crack the passwords of e-mail                accounts, and all those accounts where secret information or sensitive                personal information is stored by user such as social networking                websites, matrimonial websites, etc.
Phishing is a technique in which the attacker creates the fake login screen          and send it to the victim, hoping that the victim gets fooled into entering          the account username and password. As soon as victim click on "enter"          or "login" login button this information reaches to the attacker          using scripts or online form processors while the user(victim) is redirected          to home page of e-mail service provider.
It is possible to try to obtain the passwords              through other different methods, such as social engineering, wiretapping,              keystroke logging, login spoofing, dumpster diving, phishing, shoulder              surfing, timing attack, acoustic cryptanalysis, using a Trojan Horse              or virus, identity management system attacks (such as abuse of Self-service              password reset) and compromising host security. 
However, cracking usually designates a guessing attack.
refferency : http://www.insecure.in/password_hacking.asp 
 
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