Residents of the South will have the right to order free copies of their credit reports starting Tuesday.
The free access is required under a law enacted by Congress in 2003. Since last year, the law has been gradually phased in throughout different parts of the country, starting in the West.
Now it's the South's turn. Those living in Alabama, Arkansas, Florida, Kentucky, Louisiana, Mississippi, Oklahoma, South Carolina, Tennessee, and Texas will be able to obtain a free credit report per year from each of the three nationwide credit bureaus: Equifax, Experian, and Trans Union.
The only exception is Georgia. It's the only state in the country where consumers have been eligible for two free credit reports per credit bureau per year as mandated by state law.
Credit experts advise that everyone get a copy of their reports from each bureau and check to make sure all the information is correct.
"If there is any erroneous information you could be damaged in ways you couldn't imagine," said Todd Mark with Consumer Credit Counseling Service of Greater Atlanta.
Credit reports dictate whether consumers are approved for loans, how much money they can borrow, and what interest rates they will pay. Employers generally look at credit reports before hiring candidates to gauge reliability.
Consumer reporting companies sell the information to businesses where consumers seek credit, such as car dealers and furniture stores, as well as to insurance companies and employers.
"Too many consumers aren't aware of how their own actions impact their credit report and score," Mark said. "This law is springing to light that people should be using these as an educational and self-monitoring tool."
Before the law, people in all but six states had access to free credit reports only if they were denied credit, unemployed, on welfare, or believed they were victims of identity theft. Otherwise, they had to pay.
The new law gives identity theft victims and those who believe they are about to become victims the right to place a 90-day initial fraud alert on their credit file. Initial fraud alerts instruct creditors to exercise more care to verify the identity of the credit applicant. Identity theft victims may choose an extended fraud alert that lasts for seven years.
Alabama U.S. Sen. Richard Shelby, chairman of the Senate Banking Committee, helped write the legislation and worked for more than a year to get it passed. He plans to be among the first in his state to seek his credit reports.
"Inaccurate information could means thousands of dollars in higher interest over time," Shelby said.
Robert McLeod, a professor at the University of Alabama who specializes in personal financial planning, recommends that people get all three reports because the companies use different methodology and different databases to compile their reports.
"You'll see some things in one file that aren't in the others," he said.
While consumers will have free, more streamlined access to their credit reports, they must pay to receive their credit score, a separate component.
The Federal Trade Commission says the reports can be requested all at once or can be staggered. In Western and Midwestern states where the law has already gone into effect, there hasn't been an overwhelming rush by consumers to get the reports.
There are three ways to get them:
- Click on the Web site www.annualcreditreport.com and fill out a request.
- Call 877-322-8228.
- Print out the annual credit report request form at www.ftc.gov/credit and mail it to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.
The FTC recommends that if an error is found in a report, consumers should write the reporting company to explain the situation.