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Jordan Goodman is the author of Everyone's Money Book, available at 888-201-6300. This is the third edition of the book. You can also visit his Web site at www.moneyanswers.com. He talks with us on Thursday mornings.
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December 4, 2003
"Making the Most of FACTA"
President Bush has signed into law the Fair
and Accurate Credit Transactions Act of 2003, known as FACTA, which updates
the existing Fair Credit Reporting Act, which regulates the credit
reporting industry. The purpose of the new law is to prevent identity theft,
improve resolution of consumer disputes on your credit report, improve the
accuracy of your credit record, and make it easier for you to get access to
your credit record. The law goes into effect on Jan. 1, 2004. Here are some highlights of the bill:
- Makes it easier to get a free copy of your credit report. When you request
a copy of your report, each of the "Big Three" credit reporting
bureaus -- Experian, Equifax and Trans Union -- must provide you one free copy per
year. In the past, some states mandated that you could get a free report if you were denied credit, but now you can get one each year
if you just ask, either by phone, letter or Internet.
- Makes it easier to keep incorrect negative information off your credit
file. For the first time, creditors must notify you whenever negative
information is going to be sent to the credit bureau to be put on your
report. This might include a late payment, foreclosure, bankruptcy, judgment
or anything else that will harm your credit score. Once you get this notice
and think the information is not correct, you can dispute it before it gets
on your credit report, both with the creditor and with the credit bureau.
- Notifies you when you are taking actions that will lower your score. Many
consumers do not seem to realize that when they apply for credit frequently,
it hurts their score. So, if you are shopping for a car and each auto dealer
pulls your credit, or you shop for a mortgage in several places, those are
considered "hard" inquiries and they will lower your score. The new law will
force the credit bureaus to notify you that your frequent applications for
credit are hurting your credit score.
- Protects you against ID theft. The law allows you to put a "fraud alert"
on your credit report if you have had your ID swiped by a thief so that no
more damage will be done. This will prevent the thief from opening new
credit accounts in your name, for example. The law also allows you to block
information that was caused by an identity theft from being put on your
credit report. The law mandates that if you call one credit bureau, the
bureau shares that information with the other two, such as if you are
putting a fraud alert on your credit report. The bill also restricts how
credit bureaus share information about you with other businesses and allows
you to "opt out" of giving out your name to others, which is designed to
help you protect your privacy.
Staying on top of your credit report is extremely important, particularly
with almost 10 million Americans being hit by ID theft in the last year, with
damages of about $5 billion. Hopefully, the Fair and Accurate Credit
Transactions Act of 2003 will make it easier to monitor your
credit record than it has ever been before.
For More Financial Tips From Jordan Goodman
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