Some estimates indicate that identity theft cost consumers and businesses over $50 billion last year.
An “identity score” is an attempt to prevent costly, damaging identify theft. While a credit score is designed to measure your risk as a borrower, an identity score is supposed to estimate the risk that you are not who you say you are. Your ID score may be used by utilities, wireless service providers, car dealers, banks, and other lenders to try to put a number on how likely it is that you are committing identity theft. As you can see, it serves a very different purpose than your credit score.
Though you hear much less on television and blogs about the importance of having a good ID score, it is playing a greater role in financial transactions than ever before. This is particularly true if your score is inaccurate or based on inaccurate information.
Let’s first look at how your ID score is computed, and then we’ll determine how important it truly is.
How is your Identity Score computed?
Identity scoring systems differ greatly, but most ID scores look at how personal information, like your name, address, phone number, birth date, or social security number is used in credit applications or transactions.
ID scores look at a much larger source of information than credit scores, including criminal records and property records. They also delve deeper into your behavior to try to root out fraud. They might look at your personal information and try to find behavior patterns. They might also try to find personal information on web sites, blogs, and chat rooms that can confirm or contradict who you say you are.
The higher your ID score, the greater the likelihood you are committing identity theft. If you move around a lot, change your name, or are living in an apartment building shared by many other people, your ID score might be higher. Ideally, you want a low identity score.
Is it necessary to check your ID score?
Since you likely haven’t been bombarded with commercials urging you to check your ID score, you might think it is unimportant. However, ID scores are used before most loan applications or credit card transactions are approved.
If your ID score is low, you are less likely to run into problems, unless, of course, you have a low credit score as well. However, if your ID score is high, you could confront a number of issues.
For instance, if a bank suspects fraud, your loan or transfer might be stalled for several days as they verify your identity. Then again, you might only suffer the minor inconvenience of having to answer a few extra questions to prove you aren’t committing fraud.
Since the ID score is relatively important, should you check it? Most people have very satisfactory ID scores, but if you are worried about identity theft, you might want to pay for a service to check the score.
While the ID score is generally used by banks or other lenders to determine if you are committing identity theft, running a check can also tell you if you are susceptible to identity theft. A high score might be a sign that there are errors on your credit report upon which the ID score is based.
Where can you get your identity score?
Several companies provide a service that allows customers to check their ID scores. Generally, you aren’t required to provide your social security number. But they insist the check is more accurate with a social security number. The following companies provide ID scores:
Had you ever heard of an ID score before? Would you pay to check yours?
Published or updated March 20, 2013.