New Credit
Reporting Law (FACT)
By Gerri
Detweiler, CardRatings.com Contributing Writer and
Author of The Ultimate Credit Handbook. Gerri
will answer your credit reporting questions at her website, UltimateCredit.com.
We are proud that Gerri supports our site!
On December 4th,
President Bush signed into law the Fair and Accurate Credit Transactions Act of
2003 (FACT), a law that updates the Fair Credit Reporting Act. While parts of
the law are great for consumers, others aren’t. Different parts will go into
effect from March 2004 through December 2004.
Here are the main
provisions:
Free Annual Credit Reports
Finally, consumers will be
able to request one free copy of their credit report from each of the three
major credit reporting agencies (CRAs). This probably
won’t go into effect until near the end of the year.
In addition to the Big
Three, you’ll also be able to request a free copy of your report from bureaus
that compile and develop reports on:
`(1)
medical records or payments;
`(2)
residential or tenant history;
`(3)
check writing history (such as Chexsystems or Telecheck);
`(4)
employment history; or
`(5)
insurance claims (such as CLUE).'.
And while you can request
your credit score, there will be an as yet undetermined fee for it. If you
apply for a mortgage, though, the lender will have to provide you with your
credit score and the key factors influencing your score.
Identity Theft Prevention
One of the main thrusts of
this law is trying to help identity theft victims. In addition to charging the
regulators with developing guidelines to help prevent the misuse of consumer
credit information, there are several provisions in the new law designed to
help foil ID theft:
Members of the military on
active duty may request an alert placed on their file indicating they are on
active duty.
You’ll be able to ask the CRAs in the near future not to disclose the first five
digits of your social security number when they supply your credit report to
another company.
And if a card issuer
receives a receives a request for a new or replacement card from a consumer
less than 30 days after receiving a change of address, the issuer will have to
take additional steps to verify that the request is valid.
Credit and debit card
receipts in the future will only list the last five digits of the card.
Finally, if the address
given by someone ordering a credit report is significantly different than that
on file with the CRA, the CRA must notify the user of the discrepancy. The
regulatory agencies will develop guidelines for dealing with these situations.
If Your Identity Has Been Stolen
Was your wallet or purse
stolen? Got a call from a collection agency you never heard of?
If you think you may have
been, or are about to be, a victim of identity theft, with one phone call
you’ll be able to get a fraud alert placed on your credit file. (You will have
to fill out a fraud affidavit and provide proof of your identity.) Users of
credit reports will then have to take steps to verify the identity of anyone
applying for credit using your information.
ID theft victims will also
get two free credit reports in the year from each major reporting agency, plus
they’ll be able to block their credit file from prescreened credit offers.
Also under FACT, if you’re a
victim of ID theft, you’ll be able to request a copy of any application and
transaction records related to any business transaction that was made by the
thief.
Within four business days of
notifying a CRA of identity theft, the CRA must block the information that you
report is fraudulent and notify the lender reporting the information that you
believe it’s fraudulent. (By the way, there are safeguards built in the law so
that you can’t use this provision to fraudulently boost your credit.)
Creditors will also be
required to follow certain procedures to make sure that information that has
been blocked or removed doesn’t get reported again to the CRAs.
The goal is to keep information legitimately related to identity theft off
the consumer’s report. Creditors also generally can’t sell or transfer accounts
that consumers claim are due to identity theft – most notably to collection
agencies.
Debt collectors who are
notified that a debt may be related to identity theft must notify the creditor
from whom they received the debt that it may be fraudulent and provide
information required by law.
You’ll have up to two years
after you discover that you’ve been a victim of identity theft, but no longer
than five years from when it occurred, to bring a lawsuit.
Negative Information
Lenders will have to notify
you once before they report negative information to a credit bureau about your
account. If you continue to fall behind, this notice won’t be required again.
Risk Based Pricing
It’s a common practice these
days for lenders to advertise one low rate but then charge a higher rate after
looking at your credit report. Now they
will be required to notify you if you didn’t qualify for their generally
available best pricing based on information on your credit report. This won’t
be required if you got the rate and terms you applied for (before a credit
report was obtained). If you are entitled to this notice, though, you’ll also
be able to order a free copy of your credit report from the reporting agency
the lender used.
Accuracy Issues
For the first time,
consumers are specifically be given the right to dispute mistakes directly with
the companies that furnish information to the credit bureaus. The FTC, and banking regulators will be establishing guidelines
for this process, but generally:
·
Consumers can dispute the accuracy of information directly
with furnisher at address specified by furnisher.
- Furnishers must complete investigation within 30
days, and if information was inaccurate, notify CRA.
- Disputes initiated with the help of credit
repair organizations are specifically excluded.
Affiliate Sharing
Companies sometimes share
customer information that could be classified as credit report information with
their affiliated companies. You’ll be given the opportunity to opt out of this
sharing of information.
Pre-emption of state laws
The bad
news in all of this? Consumer groups have
opposed the pre-emption of stronger state laws that the bill includes. That
means states won’t be free to make tougher laws to protect consumers against
identity theft and other credit report problems.
We hope this article has
been helpful. Please visit our
Credit Information section for more information about credit reports.
Posted Dec. 23, 2003
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Important Note! The information in this article is believed to be
accurate as of the date that the article was written. Please keep in mind,
though, that credit card offers and terms change frequently. Therefore, we can
not guarantee the accuracy of the information in this article. Please verify all
terms and conditions of any credit card offer prior to applying.
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