An Australian organization has developed an algorithm designed solely to detect identity fraud, or people who change their given names to commit fraud following a study into credit risk. Based on research from a database of 75,000 Australians, Veda Advantage (formerly Baycorp) developed a system designed to distinguish between people who change their names intentionally (eg marriage) and people who do so solely to commit fraud.

While the research found people with three or more identities are associated with much higher credit risk, an interesting result was these people are 11.4 times more likely to reneg on phone bills, 3.2 times more likely to go bankrupt and recorded 4.2 times more writs and judgements than those with fewer than three identities.

Erica Hughes, general manager of information, services and solutions for Veda Advantage, said some people are under the false impression that if they simply change the identity details on their account, all their defaults or other elements of their credit history will be lost.

"However, because the sophisticated matching is so advanced, it is able to clearly distinguish between people who change their details to abuse the system, and those who do so accidently or legitimately," Hughes said.

"For example, if a woman decides to change her surname when she gets married, her new 'identity' details are cross-referenced to her original account, and she is not associated as a higher credit risk. Similarly those who change minor details by accident, depending on the seriousness of the loan they are applying for, are also not penalised and are not necessarily a higher risk.

"Every time an individual makes an application for credit, whether it's to start or change a phone plan, or apply for a credit card, their 'identity' details are updated on their credit file."

Veda Advantage currently offer a credit alert package ($30 annually) that notifies you whenever someone applies for credit in your name.