Home buyers nationwide -- and the realty professionals who advise them -- will be entitled to free credit reports once a year from the big three credit bureaus, beginning later this year. That free access, in turn, should help consumers keep track of any inaccuracies or omissions in their credit files that could depress their credit scores and raise the cost of the mortgage money they need to purchase a home.

In a final regulation released Friday, June 4, the Federal Trade Commission spelled out the details of how and when 200 million-plus American consumers will be able to obtain their credit files at no charge.

The free report concept was mandated by the Fair and Accurate Credit Transactions Act, signed into law last December. Under the legislation, the three big bureaus -- Equifax, Experian and Trans Union -- will now be required to provide a free credit file to any consumer who requests one, but no more frequently than once every 12 months. The information in each bureau's files typically is different on each consumer, hence the need to see all three bureaus' reports.

To make the free-report program function efficiently, the FTC rule requires the bureaus to create what it calls a "centralized source," which consumers can contact via the Web, by toll-free telephone numbers, or by regular mail.

The centralized source, which presumably will be given a more elegant name sometime in the coming months, will be designed to handle millions of individual requests per month. If the volume of requests gets excessive at any given time, the new FTC rule allows the bureaus to put consumers on waiting lists for delayed processing. Absent such volume-related delays, the national credit entity will be required to deliver you free credit reports within 15 days of your request.

To apply for your files, you'll need to provide some personal identifying information, such as your Social Security number and home address. The centralized credit source will be equipped to provide credit scores along with the free files, but the bureaus will be able to charge fees for the scores.

The credit website will also carry advertising materials for other products the bureaus can provide, such as automated credit-monitoring services that alert you to sudden downward movements in your credit scores or credit transaction patterns indicating possible identity theft. These products will cost money and be available year-round.

Credit bureau executives say that marketing additional credit products is essential to help defray the costs of providing free credit reports. Also, they argue, the more regularly consumers keep an eye on their credit files, the more likely they will be to improve their "credit literacy" and spot problems before they apply for home loans.

When can you start receiving your free credit reports? Under the FTC's final rule, it all depends on where you live. During the summer and fall months this year, the bureaus will create the "centralized source" and get it up and running no later than Dec.1. On that date, all residents of what the FTC defines as the Western states will be able to begin requesting free reports. The Western states include Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington and Wyoming.

On March 1 next year, residents of the Midwestern states will get the green light. Those states are Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota and Wisconsin. On June 1, 2005, residents of the Southern states will be able to file requests: Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, Oklahoma, South Carolina, Tennessee, and Texas.

Finally, on September 1, 2005, the Eastern states will get their shot: Connecticut, Delaware, District of Columbia, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, Vermont, Virginia and West Virginia.

None of this precludes you, of course, from going online and ordering copies of your reports right now at relatively nominal fees (typically $9 per report) from any or all three of the bureaus' existing websites. Plus you can get your scores plus credit files at www.myfico.com, the website of Fair Isaac Co., the credit score developer.

Credit check-ups should be like medical or dental check-ups: You need to do them at least once a year, preferably more frequently, to make sure you don't have unexpected problems.

Published: June 7, 2004

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Kenneth R. Harney writes an award-winning, nationally-syndicated column on housing and real estate from Washington, D.C. He is also managing director of the National Real Estate Development Center, a professional education company. He is a past member of the Federal Reserve Board's Consumer Advisory Council, a committee that by federal statute reviews all Fed actions on home mortgage, consmer credit and banking industry regulation. He served as a member of the U.S. Department of Housing and Urban Development's Working Group on Computerized Loan Origination (CLO) systems, and is a member of the Editorial Board of the Fannie Mae Foundation's journal, Housing Policy Debate. He is the author of two books on mortgage finance and real estate.