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Federal law grants free credit reports

The law aims to defend against identity theft by informing consumers.
Thursday, March 3, 2005 | 12:00 a.m. CST; updated 5:15 a.m. CDT, Tuesday, July 22, 2008

A federal law has armed Midwesterners against one of the fastest growing crimes in the nation.

Supporters of the law say people will be better suited to defend themselves against identity theft when equipped with a report of their credit history.

The free credit reports are mandated by the Fair and Accurate Credit Transactions Act, which was signed into law by President Bush in December 2003 but wasn’t implemented in the Midwest until Tuesday.

Midwesterners are now entitled to one free yearly credit report from each of three major credit bureaus: Experian, Equifax and Trans-Union. A credit report cost roughly $10 before the law went into effect, according the credit bureaus’ Web sites.

“Consumers should take advantage of this entitlement to make sure all information contained in their credit report is accurate and help safeguard against identity theft,” said Sandra Huston, assistant professor of personal financial planning at MU.

Offering a free credit report will not only help people defend against this crime but will also raise awareness of credit fraud in general, said Jordana Beebe, communications director of the Privacy Rights Clearing House.

The Better Business Bureau projected that one in 23 adults would be victims of identity theft this year, according to a Feb. 6 news release.

“It used to be people would only find out about identity theft after they were turned down for a big purchase,” Beebe said. “People are generally unfamiliar with their credit report or score. This law will empower them to make better decisions.”

Spokespeople for the three major credit bureaus said Midwesterners have already taken advantage of the free reports.

“As was expected, we’ve seen a heavy increase in our volume,” said David Rubinger, Equifax spokesman.

The free report can be requested over the Internet, the phone or by mail.

TransUnion spokesman Cliff O’Neal said the Internet is the fastest and easiest way to request the report, but Beebe recommended consumers use the phone or mail. She said that way people can avoid credit bureaus’ marketing attempts.

“Our primary concern with ordering online reports is that people are susceptible to receive business pitches from the credit companies,” Beebe said. “People may feel obligated to buy other unneeded credit services the companies are pitching.”

The Fair and Accurate Credit Transactions Act is being implemented in phases across the country. The process will finish on the East Coast on Sept. 1, according to www.annualcreditreport.com.

When he signed the act into law, President Bush said its purpose was to improve the quality of credit information and protect consumers against identity theft.

The credit industry initially opposed the law when it was introduced but has since adjusted its position.

“Equifax originally came out against giving away its service for free, but are now in full compliance with law,” Rubinger said. “We believe consumers needs go well beyond a yearly report and we provide many other services people will need.”

None of the companies are releasing information on the economic effects of giving away credit reports, but they do say it was a cost-intensive process.

The credit bureaus said they are focused on helping consumers deal with identity theft.

“We are looking at it as a positive step,” O’Neal said.


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