Your ID Score and Credit

Q. How can your 'identity score' affect your credit?

A. ID scores are numeric ratings—usually from 1 to 999, with lower numbers being better—calculated on how your name, address, Social Security number and other personal information are used in transactions or for credit applications.

Identity scores are used by creditors, service providers and others to predict a consumer’s risk of identity theft and whether loans and accounts issued in that person’s name are likely to be fraudulent.

Because of the Federal Trade Commission’s Red Flags Rules, which banks and creditors are now required to use to identify and respond to suspicious practices, the use of ID scores is likely to increase, and so is the marketing of them to consumers.

Your ID score can be hurt if you have a history of changing addresses often or if you live in a place like an apartment building where a lot of mail is delivered, making it attractive to identity thieves. Even having an out-of-state cellphone number is a negative factor.

Are these scores really important to your creditworthiness, or just another potential product for marketers of identity protection services?

“Probably a little of both,” says John Ulzheimer of Credit.com.

A business that receives a credit application from a consumer with a high (bad) ID score might ask the applicant questions about his or her past, with the intent of weeding out frauds who won’t know the answers. A bad score might also slow some transactions.

Although ID scores are now mainly sold to credit-issuing companies, not consumers, that might change. Consumers can get a free ID score at My ID Score.

Four more scores

There are other scores as well, “unknown to most consumers and not publicly available, that are more widely used and much more important to an individual’s financial well-being,” Ulzheimer says. They include:

• Revenue score: A gauge of how much money a consumer’s account will likely generate.

•  Bankruptcy score: A prediction of the chance an applicant will file for Chapter 7 liquidation or a Chapter 13 repayment plan.

• Collection score: A measure used by collection agencies to predict the likelihood that consumers will pay them.

• Behavior score: These focus on a single account, such as a credit card, noting whether an account holder typically pays a bill in full each month, carries a balance, or makes only the minimum payment.

Sid Kirchheimer writes about consumer and health issues.