After years of debate and discussion, consumers will finally be able to obtain free copies of their credit reports in all states under a new rule adopted by the Federal Trade Commission.

This sounds like a wonderful and sensible idea, especially when one considers that for years the credit industry fought expanded public access. However, the new FTC rule is actually better than it looks -- good news for consumers.

It wasn't so long ago that consumers had a hard time seeing their own credit reports. That began to change as the credit industry saw that the sale of credit reports and credit monitoring services could be profitable -- and also because such states as Colorado, Maryland, Massachusetts, New Jersey and Vermont said residents could get a free credit report each year by simply asking. Georgia went further and said residents could request free reports up to two times per year.

The credit industry also began to see something else: Credit reports are more valuable if they're correct and the best way to assure accuracy is to have people check their own histories.

The new FTC rule talks about free annual credit reports, an expression which sure sounds like one per customer each year. In fact, the new rule does say that -- and more.

"The Fair and Accurate Credit Transactions Act of 2003 (FACT Act or the Act)," says the rule, "requires the FTC to adopt regulations to require the establishment of a centralized source through which consumers may request a free annual file disclosure from each nationwide consumer reporting agency; a standardized form for such requests; and a streamlined process for consumers to request free annual file disclosures from nationwide specialty consumer reporting agencies."

Notice what the language says: Not just a free annual credit report but "a free annual file disclosure from each nationwide consumer reporting agency." (Emphasis mine)

And how many nationwide consumer reporting agencies are there?

Three -- Equifax, Experian, and TransUnion.

Does this mean that a consumer can contact each credit reporting agency once every 12 months for a free report?

Realty Times asked Helen Foster, an FTC staff attorney who worked on the credit guidelines. Her answer:

Yes.

In effect, you could order a free credit report every four months once the new rule kicks in for your state -- just apply to a different credit reporting bureau.

As the FTC rules were being developed the possibility that a consumer might obtain more than one free report annually did arise. One idea to reduce credit bureau costs was to offer a single annual report which combined or merged data from the three major consumer reporting agencies. However, that approach is not in the final rule.

A related issue is that the states mentioned above already require free credit reports for residents. The FTC rule, being federal, will supplant state laws as it rolls out nationally -- with the exception of Georgia which will continue to have a two-per-year allowance for residents.

Realty Times also asked Foster if there was any evidence that consumers actually sought free reports in the states where they are now available. She said the FTC generally believed that the inquiry rate varied from 2 to 10 percent annually. The highest rate is in Colorado where citizens receive an annual notice alerting them to availability of free reports, while states without a notice provision had lower response levels.

Around December you'll begin to see information on Realty Times showing how you can order your free report online, by phone or by mail. The program will not be available in all states immediately, but by September 2005 free reports will be accessible to everyone in every state.

Do your part: Check your credit regularly. It's smart, it's easy and by September 2005 it will be free no matter where you live.

For more articles by Peter G. Miller, please press here.

Published: June 15, 2004

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Peter G. Miller, also known as OurBroker®, is the author of six real estate books -- including The Common-Sense Mortgage -- and is the original creator and host of America Online's Real Estate Center. Peter's weekly columns appear in more than 100 newspapers nationwide, he is also published in a variety of other media outlets and he is a frequent speaker at national events and conventions. Peter welcomes your questions, comments, and news releases via e-mail at .