Credit Reports and the New Law: What They Mean for You

Professor Bill Scroggins said the new rules that give consumers free credit reports is a good idea.

By Sherry Kughn JSU News Bureau 2 March 2005 — After June 1, consumers in Alabama can obtain their first free credit reports with no strings attached. Normally, companies that advertise free reports issue them only after the customer has signed up for a monitoring or credit repair service, which charges a monthly fee. The change is possible thanks to an amendment to the federal Fair Credit Act by the Federal Trade Commission. The amendment, which started in the western states earlier this year and will be effective for the entire United States after September 1, means consumers may obtain up to three free credit reports annually because the reports are distributed by three separate companies, Trans Union, Experian, and Equifax. “This is a terrific safeguard that should help protect consumers,” said Dr. Bill Scroggins, JSU professor of finance and real estate and head of the Department of Finance, Economics, and Accounting. “Consumers should check their credit report regularly to make sure they have not been victims of identity theft. Last year, nine million people were victims, and that resulted in out-of-pocket expenses of $5 billion dollars.” One of the best ways to use the credit reports after June 1 will be to spread the three checks out over a year. That way, the consumer can inspect their report once every four months. The advantage to obtaining all three at the same time is to be able to compare them simultaneously. JSU Police Sgt. Shawn Giddy remembered an incident where a student got a credit card in another student’s name and ran up a bill. The credit card was found on the wrong person as she was being arrested on another charge. “Since the bill was not going to the victim’s address, we knew about it before the victim did,” said Sgt. Giddy. When identities are stolen, the greatest losses are usually incurred through unauthorized credit card use, according to Dr. Scroggins. Consumers should always check their credit card statements and call their credit card company at once if unauthorized charges show up. They should report lost credit cards to the credit card companies, and they should learn how to go online to check the card’s balance. This can be done daily, if the consumer so prefers. “Many people discover that thieves have stolen their identity and ruined their credit only after being turned down for a new credit card or a loan,” said Dr. Scroggins. Sgt. Giddy said credit card theft can be hard for the thief to overcome. “What the thieves don’t realize is that they leave a paper trail wherever they go,” said Sgt. Giddy. “When they are caught, we are able to charge them with one count of forgery and one count of unauthorized use of a credit card; that’s two felonies for every purchase made,” he said. Dr. Scroggins believes that the growing risk of identity theft is one reason the Fair Credit Act was amended. “Also,” said Dr. Scroggins, “consumers have the right to know what is in their credit file. They have a right to dispute incomplete and inaccurate information.” Credit reports may divulge more than consumers realize, such as their address, how they pay their bills, whether they have been sued, been arrested, or filed bankruptcy. Lenders, landlords, bankers, and other professionals have access to this information. Credit reports also contain the names of companies or agencies that have checked the credit of a consumer. The easiest way to learn more about the upcoming changes is to visit the website at www.annualcreditreport.com. After June 1, free credit reports can be obtained by calling toll free, 1-877-322-8228, or by requesting a form, filling it out, and sending it back to Annual Credit Report Request Service, PO Box 105281, Atlanta, GA 30348-5281. There, consumers can obtain helpful brochures, contact information, a list of frequently asked questions and answers, and other information. Contact information on each of the companies that handle credit reports is Trans Union www.transunion.com, 1-800-888-4213; Experian www.experian.com, 1-888-397-3742; and Equifax www.equifax.com, 1-800-685-1111. Submit items for news releases by using the request form at http://www.jsu.edu/news/requestform.html.