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How Does the Identity Score System Work and Why Does It Matter?

Whether you are just starting to build you credit history or repairing your credit scores and history it is good to know about your identity score and how the identity scoring system works.

Identity scoring systems are built by collecting information from a variety of sources and for different purposes usually for one of the three most common purposes: public records, private records and credit scores. Patterns and predictions are determined by analyzing the results of the collected information.

Your private indentity scores that are non-credit could include bill and utility payment subscription-based services, billing information from medical services and private background checks that human resource departments conduct.

Private credit records can include information submitted to credit bureaus or credit reporting agencies. Auto insurance companies generate their underwriting scores from credit records.

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Financial records like bankruptcies, liens and judgments, as well as property ownership records, and voter registrations fall into the category of public records, along with government records and Law enforcement records for felonies or misdemeaor convictions.

Identity Score Components

Some of the public, private and credit records can overlap and become part of your idenitity. There are of course, some typical identity score components when each identity scoring system uses individual data to generate their scores. Some of the common identifying components might include personal information such as name and address components, behavioral and use component such as internet information from social media sites, logs, blogs, forums, interests and activities collected and analysed for patterns.

There is also the undesirable components that hackers and frauds collect, and criminal activity componenents where personally idendifying information data has been stolen for fraudulent purposes. Such data breaches may be used for determining recognizable patterns of fraud to investigate unexplained credit card purchases.

Further there are components for personally identifying information used to create new false identity also called synthetic identity.

Identity scoring information is not only used to measure authenticity of a particular identity preventing fraudulent use of identities and synthetic identity theft on the consumer level, but can also be used as public information data in an individual’s identity score.

Credit Scores

Credit scores do not measure any financial or personal activity that is not related to credit. Identity fraud not involving credit will not show up on your credit report or affect your credit score. Whereas credit scores and the credit scoring system are predictable and there are specific steps you can follow to improve your credit score, dispute errors in credit reports, etc.

Identity scores are made up of larger and more varied sources from information that is constantly changing as public records are altered when people buy or sell property, change jobs, or have some kind of encounter with law enforcement.

Identity Theft

Identity scoring works by matching the information the user provides against billions of records in public databases, ranging from property and tax records to Internet search engines, and calculating it against patterns designed to recognize fraud or identity theft.

Because identity scores include much more accurate information and can predict behavior patterns more definitively than credit scores but include credit records, they are more effective than credit monitoring for identity theft prevention measures, even though it is not foolproof.

Business and consumer identity scores were originally developed by financial firms to help measure fraud risk for new customers, but now identity scoring enables financial institutions to comply with criminal investigations and even anti-terrorism through the Bank Secrecy Act (BSA) and other Acts. The use of fraud detection and authenticity checking tools can be helpful to verify identities and flag suspicious activities. This makes identity scoring more valuable.

You are entitlied to get your credit reports, and as you monitor them regularily you will be better equipped to spot any suspicious activity and discretions including credit card purchases you did not make. You can also take steps to have some discrepencies in your records removed to keep your records clean, protect your identify and deal with any fradulent activities concerning your credit records or credit cards.