Free credit report by the government

In November 2003, Michael A. Chester was set to begin process of buying a new home. He applied for the home loan and was surprised to learn that his credit report revealed an extra $87,000 of debt including a car loan, educational loan, and home improvement loan, other things.

"It turns out that TransUnion confused my name with that of a relative who has a similar name. His Social Security number was listed on my credit report and, although he was paying all of his bills on time, this gave me a higher debt-to-income ratio according to the loan officer. I was told that my interest rate would be a little higher," said Chester, owner of press by mac, an artistic, graphic design, and photography company. "I wrote to them and told them of their mistake. They corrected it within four weeks."

Chester's story is one many consumers face when dealing with their credit reports. As a result, the federal government has made sweeping changes and additions to the Fair Credit Reporting Act (FCRA). Signed into law Dec. 14, 2003, the new Fair and Accurate Credit Transactions Act of 2003 (FACTA) has added provisions to enhance the accuracy of credit reports, gives consumers more access to their credit information, and puts systems in place that will combat identity theft. FACTA does not replace the FCKA.

"Beginning Dec. 1, 2004, consumers will be able to request one free credit report per year. This will enable consumers to keep track of their credit rating without having to pay a fee to a consumer reporting agency," says Jen Schwartzman, spokesperson for the Federal Trade Commission (FTC). "Consumers will also be able to place fraud alerts on their credit files if they believe they've been the victims of identity theft, Once the alert is there, creditors will not be permitted to open new accounts in a consumer's name without getting in touch with the consumer first."

Previously, consumers would have had to contact the three major credit bureaus--Equifax, Experian, and TransUnion--to alert them that fraud may have occurred. In the meantime, an identity thief may be obtaining credit in the consumer's name. FACTA will also enable consumers entering active military duty to put a special notice on their credit file to prevent becoming victims of fraud while they are out of the country.

To find out more about FACTA, visit the FTC's Website at www.ftc.gov or call its Consumer Response Center at 877-FTC-HELP.