Identification

• Congress passed the Fair and Accurate Credit Transactions Act in 2003 in an effort to help consumers fight identity theft by providing them better access to credit reports. FACTA is an addendum to the Fair Credit Reporting Act and it gives you the right to receive one free report each year from Experian, TransUnion and Equifax. You can order the reports online using the Annual Credit Report website, which was jointly established by the bureaus in compliance with the provisions of FACTA.
  
  

Considerations

• The Fair Credit Reporting Act provides consumers with the right to receive a free report under other limited circumstances in addition to the free report mandated under FACTA. When you apply for credit, a lender views your credit file. If that lender takes adverse action against you, such as a denial of a loan, that lender is required to give you written notification of the adverse action. The FCRA then requires the credit bureau whose file was accessed as part of the credit decision to give you a free copy of your credit report. The notice will specify which bureau's credit database was used. Also under the FCRA, you can receive a free copy of your report from each bureau if you are the victim of identity theft or are unemployed or on welfare.
  
  

Warning

• Since the passage of FACTA, several websites now offer free credit reports but be careful. This type of site often requests credit card information in order to sign you up for a trial of credit monitoring and will continue to charge you a monthly fee if you don't cancel in time. The Federal Trade Commission sued the owner of the website freecreditreport.com, which is Experian, alleging deceptive advertising practices regarding this issue. In a settlement, Experian agreed to reimburse consumers whose credit cards were charged for the monitoring product.
  
  

Significance

• Although consumers are entitled to a free report under the Fair Credit Reporting Act and FACTA, this right does not extend to credit scores. Under FACTA, credit bureaus must provide you with access to your credit score but the law allows them to charge a reasonable fee for it. The law only allows for a free credit score in connection with a mortgage application. If the lender uses your credit score as part of the loan process, you may receive a free credit score depending upon the type of loan you applied for.