What's Your ID Score?

July 9, 2009
Michael Sheehan

As banks tighten lending standards and insurance companies stiffen underwriting rules, your credit score has become one of the most important numbers in your life, right next to your Social Security number.

As banks tighten lending standards and insurance companies stiffen underwriting rules, your credit score has become one of the most important numbers in your life, right next to your Social Security number. Now, there’s a new number that’s rapidly gaining ground. Called an “identity score,” it’s a measure of the risk that you aren’t who you say you are. In the midst of growing concern over identity theft, the ID score is being used more often by banks and other businesses to pinpoint transactions that might be fraudulent.

Not everyone is pleased with ID scores. Consumer advocates point out that the scores are subject to the same errors as credit scores, such as mistakes on an individual’s credit report. Information on somebody other than the person named in the credit report, for example, can skew the ID score. Most troubling, say critics, is the growing use of sensitive personal information to build files on individual consumers.

While a credit report is one of the primary tools in determining your ID score, other factors, like where you live, how often you’ve moved, and whether you’ve changed your name, can boost your ID number. (Unlike your credit score, a lower ID score is better.) If a transaction is flagged because of a high ID score, an applicant will most likely be asked “challenge” questions that an identity thief would not be able to answer. Some of those questions, however, might even stump a legitimate consumer, who could then be faced with a significant delay in the transaction.