LSU AgCenter Family Economist Says Free Credit Reports Now Official

Jeanette A. Tucker  |  4/19/2005 10:28:28 PM

News You Can Use For July 2004  

Consumers now may receive a free copy of their credit report as often as once a year, according to LSU AgCenter family economics professor Dr. Jeanette Tucker. The Federal Trade Commission made it official when it recently issued its final rule regarding free annual credit reports under the Fair and Accurate Credit Transactions Act (FACTA) and the Fair Credit Reporting Act (FCRA).

Tucker explains that FACTA, which was enacted on December 4, 2003, amended the FCRA and requires, among other things, that the three nationwide consumer reporting agencies (CRAs) Equifax, Experian and Trans Union provide to consumers, upon request, a free copy of their credit report once every 12 months.

The final rule contains many of the provisions of the proposed rule, with some modifications. Under the final rule, the nationwide CRAs must establish a "centralized source" for accepting consumer requests for free credit reports. This centralized source must include a dedicated Internet Web site, a toll-free telephone number and a postal address.

The final rule also provides for a gradual, structured roll-out of the centralized source. This source will become available in cumulative stages, over a period of nine months, rolling out from west to east beginning December 1, 2004. The entire transition will be complete by September 1, 2005. Consumers in Louisiana and other southern states (Alabama, Arkansas, Florida, Georgia, Kentucky, Mississippi, Oklahoma, South Carolina, Tennessee and Texas ) will become eligible on June 1, 2005.

Tucker says the final rule provides that the centralized source:

• Must have adequate capacity to accept requests from the reasonably anticipated volume of consumers making requests.

• May collect only as much personally identifiable information as necessary to process requests.

• Must provide clear and easily understandable information and instructions on how to make requests.

• May not include any advertising or marketing that interferes with, detracts from or undermines the purpose of the centralized source.

In addition, the final rule provides nationwide CRAs with relief from the capacity requirements of the final rule during times of unusually heavy request volume. In those circumstances, nationwide CRAs are permitted to place consumer requests in a queue for processing, or request that consumers return to the centralized source at a reasonable later time.

The final rule also requires that nationwide CRAs develop and implement reasonable procedures to anticipate the volume of consumer requests, including contingency plans. Furthermore, it limits the use and disclosure of personally identifiable information collected through the centralized source. It provides that personally identifiable information collected as the result of a consumer request for a required disclosure, such as a free credit report, can be used only to process the consumer’s request, to update the nationwide CRAs’ consumer reporting databases, to process transactions the consumer requested at the same time as a request for a free annual credit report and to comply with applicable law.

In addition, the final rule requires nationwide specialty CRAs that maintain specific types of files on consumers, such as employment history, tenant history, medical records and insurance claims to maintain a toll-free telephone number through which consumers may request a free copy of their credit reports once every 12 months.

Tucker says there are a number of reasons to check your credit report each year.

• Lenders make mistakes – you can spot them and have them corrected.

• Credit reporting agencies make mistakes – others may have your name or a configuration of your name. Someone else’s data may mistakenly be entered in your credit record; or, your data may be entered in another’s file.

• Early detection of identity theft – many ID theft victims don’t realize they have been victimized until years go by and immeasurable damage has been done.

• To ensure that positive action has been reported – individuals who are working to address bad credit and low FICO scores need to check to see that positive action they are taking to improve their scores has been reported to at least one of the CRAs.

• Accuracy of "insurance scores" – insurance companies now use an insurance score to determine auto insurance rates. Credit history plays a significant role in determination of your insurance score. Other factors, such as a claims history, are also included, but credit history is a major factor.

FACTA will enable consumers to get one free copy of their credit reports from each of the three major credit reporting agencies each year.

"Imagine – consumers could systematically rotate their requests and get their credit report from one of the CRAs every four months!" Tucker points out.

For information on related family and consumer topics, visit the FCS Web site at http://www.lsuagcenter.com/Inst/
Extension/Departments/fcs/.  For local information and educational programs, contact an extension agent in your parish LSU AgCenter office.

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Contact: Jeanette Tucker at (225) 578-5398 or jtucker@agcenter.lsu.edu

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