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Good News
The consumer news out of Congress and the Bush Administration hasn't been good: anti-consumer bankruptcy law; tougher rules for holding corporate wrongdoers accountable through class actions; and a drumbeat of bad environmental decisions. However, as a result of a change in federal law, starting on September 1st, New York consumers can order free credit reports. These are the reports that credit bureaus use to keep track of how well individuals pay off their debts. It is used to determine whether consumers qualify for credit, like a mortgage, and has been used as a factor in setting insurance premiums. The information on your credit report is what goes into your credit score, which is used as a single indicator of your creditworthiness. Easy access to credit cards and other forms of credit has helped many consumers to make purchases that they would not have been able to do by paying out of their own pockets. But there is a darker side to the American system of credit and the widespread trading of consumer financial information. For starters, far too often the information fed into the giant computers that track our every financial move is flat out wrong: someone else's information may be on your report or the information from some public record is erroneous. Studies show that as many as 1 in 4 credit reports have serious errorsămistakes that can result in a denial of credit or paying much higher interest rates. The widespread use of credit information has also created opportunities for criminals to obtain credit information of unwitting consumers. It is this "identity theft" of innocent consumers' credit that can lead to real trouble for those affected. Here's how it works. A criminal somehow gets an important piece of personal information about you — say your Social Security number. Using that ID and your good credit rating, the criminal opens up new credit card, checking and utility accounts, then goes on a shopping spree ‚ possibly even renting an apartment. All the time, he or she would not be paying the bills and thus ruining your credit. The Federal Trade Commission has stated that identity theft is the number 1 concern among consumers contacting the agency. And with good reason: Studies in 2003 estimated that as many as 7 million people became victims of identity theft in the prior 12 months, with the total loss of $2 billion. That's why this new law is so important. The sooner you find the problem, the less hassle to get it fixed. New Yorkers can order their free credit reports and do a "financial health check up" to make sure all the information on their report is accurate and that there's nothing that indicates they've been an identity theft victim. Consumers can log onto the government-mandated website at www.annualcreditreport.com to get their free reports from the three major national credit bureaus, Experian, Equifax, and TransUnion. Consumers also can order their reports over the phone by calling toll free (877) 322-8228. Consumers should stagger their requests to the three credit agencies to get "snapshots" of their credit profile over the course of the year. For years credit reporting agencies built a lucrative business by collecting and marketing consumers' personal financial information—often plagued with errors—and selling it back to the public in the form of credit reports. Now New York consumers can finally look at their own files for free. But you won't be able to know for sure that your credit information is accurate unless you check. Again, you can do so by logging onto www.annualcreditreport.com to get your free reports. Or you can get it by calling toll free (877) 322-8228. That's all for now. I'll be keeping an eye on the Capitol and will talk to you again next week.
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