Credit Score and Identity Theft

Can My Credit Score be Used to Monitor for Identity Theft?

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By Carrie Kerskie, Director of the Identity Fraud Institute at Hodges University

I am so glad you asked. This is probably one of the greatest identity theft myths, besides the one about being able to prevent it. In short, the answer is no. A credit score alone cannot predict or detect identity theft.

It Doesn’t Add Up

If I were to ask you how to calculate a credit score, would you be able to give me an answer? No. Why? Because there are multiple ways to calculate a credit score. The most well known credit score calculating company is FICO, and they are not disclosing their credit score formula. How it is actually calculated has become one the great mysteries of the world. Not really, but it seems as if it is. If you pulled your credit score right now, one from each bureau, they could vary by one to 20 points. So how do you know if this is a result of identity theft or merely a variance in the formulas? You don’t.

Lack of Consistency

In addition, not all creditors report information to all three major credit bureaus – Experian, Equifax and TransUnion. This results in varying data per report. When the data is pulled from each report and entered into the credit score formula, you end up with different credit scores.

Garbage In, Garbage Out

As stated earlier, a credit score is calculated based on the data listed on a credit report. If you are already a victim, and don’t yet know it, and your identity thief is paying the bills, then the fraud will be calculated in your credit score. You might be saying, but criminals don’t pay bills. Don’t fool yourself. I have worked with victims whose credit scores improved because they were victims of identity theft.

When it comes to detecting or monitoring for identity theft, your credit score is worthless. It cannot tell you if there is a fraudulent name or address associated with your report. It cannot tell you if someone is using your social security number to file a fraudulent tax return. It cannot tell you if someone is attempting to obtain new credit in your name. If you are seeking new credit, your credit score is important. If you want to monitor for identity theft, your credit score is not important.

The only way to monitor for identity theft is to review your full credit report, not a summary. You need to review the list of creditors, recent inquiries and the information listed under name and address. Once you have done this, you can either self-monitor by staggering your free annual credit reports or use a credit monitoring service. If you know you will not be applying for new credit within the next 12 months, then your best option is to place a credit freeze, or security freeze, with each credit bureau. This is covered in my article, “How Do I Get My Credit Reports.

Remember, when it comes to identity theft, your credit score is a worthless tool for monitoring and detection. You need to review your credit reports for the whole picture. There are no shortcuts in the fight against identity theft.