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In December of 2003, the Fair Credit Reporting Act was amended, and the changes made it possible for residents in every state to request and receive a free annual credit report.

With so many advertisements, promotional offers, and other gimmicks, it can be initially confusing to figure out exactly how to go about getting your free credit report without hassles and obligations. Many different kinds of companies are marketing "free" reports as a way to get you involved with whatever business they are conducting.

Why Order a Credit Report?

A credit report can tell you many things, in addition to your numerical credit score. Known as a FICO score, it uses formulas to assess a consumer's probable credit reliability. The report also lists creditors, any records of inquiries from creditors and lenders, as well as protected medical account data. It can be a valuable tool for securing larger purchases, such as homes, cars, and even business equipment. Mistakes are often detected through an annual report. An occasional error is usually nothing to be concerned about, provided it is corrected as soon as possible. However, numerous and recurring errors on a credit report may indicate fraud or identity theft.

Recent History Related to Credit Report Issuance

Fortunately, there is a way to monitor your credit information because you have a right to get one credit report every twelve months. The Political and Economic Research Council conducted the research which resulted in The Fair and Accurate Transactions Act of 2003. Under this law, which passed at the federal level, consumers in all states have access to an annual report. Before this law, only around eight states had laws allowing their residents to get the reports. The three credit reporting agencies, Experian, TransUnion, and Equifax, are now required, by federal law, to release one free annual credit report to any consumer who requests this information.

These companies have cooperated and set up a system where consumers can go to avoid any confusion concerning the accuracy and reliability of the information. Requesting a free report once every year is now a streamlined process, with the added security of knowing that the report along with other relevant information is secure.

Other Items on a Free Credit Report

In addition to securing consumer access to their credit report, there are several related titles within this Act which are directly related to the information contained within a consumer's credit report. Consumers who might only have been interested in their credit score initially may want to take a closer look at the some of the less well-known details. Outlined below are the most relevant titles, and a summary of how it affects the credit report. After all, a credit report is a more than a changing numerical credit score, even more so after the passage of FACT. The following titles in the Act and a summary of each should assist you in understanding the potential impacts that this law can have on a consumer's credit report.

• Identity Theft Prevention and Credit History Restoration -- As its name suggests, this section is aimed at preventing fraud by enabling an alert system to be activated by a consumer who suspects that fraud is or is about to occur. If activated, the consumer reporting agency must put into action a "fraud alert," which will be on file for 90 days, and will also be shared with the other consumer reporting agencies.

• Fraud Alerts -- In addition to enabling a fraud alert, it is also possible for consumers to have it extended for a longer period of time. This requires that the reporting agency must issue the alert on any subsequent credit scores for up to a seven-year period of time. There is a similar provision for consumers with active duty membership where the alerts can prevent lists from going out to any third party companies who offer lines of credit. This active duty alert is enabled for two years after it is requested by the consumer.

• Truncation of Credit and Debit Card Numbers -- This provision affects businesses who are concerned about internal fraud and theft of credit card numbers from receipts. However, it only applies to some cash registers based on the date of manufacturing.

• Identification of Possible Instances of Identity Theft, a.k.a. Red Flags Rule -- Among other regulations, requiring the performance of procedures by financial institutions in detecting possible identity theft, this title also affects mortgage lenders and consumer credit scores. It requires that the mortgage lender disclose to the consumer their credit information which includes the score, the possible scores they could get, the scoring models, and the different variables which affect a consumer's score.

• Protection and Restoration of Identity Theft Victim Credit History -- Victims of fraud and identity theft, under this provision, can refer to the summary of rights which must be provided to them upon contacting the agency to report the fraud or the identity theft.

The FACT Act Effects on Credit Reports

After the passage of FACT, individuals who suspect fraudulent activities can activate an alert which will be placed on the credit report. This makes it harder for the fraud to continue and protects against the numerous forms of identity theft. They are more informed of the rights and responsibilities involved in reporting fraud and identity theft, and can be guaranteed a free credit report every year.