Bill provides for free copy of credit report Md. precedent-setter would apply in Oct.


Consumers in Maryland would have the right to a free annual report of their credit ratings and a free copy of a statement of rights under a bill passed by the General Assembly.

The bill is believed to be the first in the country to require free reports from the companies that collect and sell data on the financial health of virtually every adult in the United States.

Gov. William Donald Schaefer is expected to sign the bill this month, though a spokesman for his press office declined to comment. The law would take effect Oct. 1.

TRW Information Services, Equifax Inc., and Trans Union Corp. of Chicago are the three major credit-file repositories in the country. They directly own 100 smaller bureaus and sell their computerized information to hundreds of affiliates and independent bureaus.

Together, the three companies have more than 150 million files each, and sell 1.5 million credit reports every day.

Currently, a Maryland consumer must pay $5 -- a cap set by state law -- to each company for a copy of his credit report and wait a week or more to receive it. Moreover, consumers at times have had to wait months to get errors corrected.

Unlike consumers, businesses wanting these reports before granting bank loans, home mortgages or other consumer credit can get them cheaply and instantaneously by computer.

The legislation sets out other requirements to help Maryland consumers obtain and correct information from credit bureaus. It includes a time limit for companies' responses to people whose credit standings could be undermined by erroneously negative credit reports.

In addition, consumers would receive information describing their rights and further avenues of appeal in cases where the credit bureau stands by its original information.

George W. Jones, assistant state commissioner for consumer credit and one of those writing the regulations to enforce the new law, said correcting such reports would prove easier.

"Under the old system, you could hardly get anything removed. You'd have to send them registered letters and it would take months," he said. "Now, they have 30 days to respond to your complaint and, if they find an error was made, 60 days to correct it."

The state law comes in the midst of a stalled battle in Congress to amend the 1971 Fair Credit Reporting Act to provide similar help to consumers.

The issue came to a head in 1990, the year the Federal Trade Commission received more complaints about credit bureaus than any other consumer item, including cars and loans. The number of complaints involving credit bureaus doubled that year to 8,700, a 50 percent jump from 1989.

Last year, a study by Consumers Union found errors in nearly half of the records it studied. In about 20 percent of the cases, the inaccuracies were serious enough to hurt a consumer's credit.

Nineteen states and the FTC sued TRW, the nation's largest credit bureau, last year for failing to establish procedures to maintain accuracy. The suit was settled, and TRW now provides a free annual report to those who request it.

Equifax has responded to pressure for change by setting up toll-free telephone numbers for consumers to obtain copies of their credit reports. That number is (800) 685-1111.

The credit bureau industry is generally opposed to free reports, according to Norm Magnuson, spokesman for Associated Credit Bureaus, a trade group in New York.

Mr. Magnuson said he was unaware of any other state with such a requirement, though some states do set a maximum charge for the reports and Congress is considering a cap of $8.

"Of the 800-plus credit bureaus out there, most are small business people," Mr. Magnuson said. "To have them give away a free report with the economy the way it is, is just going to cost too much of their margin," he said.

The credit-disclosure bill that passed was substantially weaker than the one introduced by its sponsor, Sen. F. Vernon Boozer, a Baltimore County Republican.

Among other consumer-protection measures, the original bill included an outright ban on the sale of consumer credit reports to third parties such as marketing businesses.

Those measures were defeated in the House of Delegates after strenuous lobbying by the bank and retail industry against certain provisions that they feared would hurt them, as well as opposition from the credit bureau companies themselves.

The result is that consumers must take the initiative and write a letter to a credit bureau requesting that their file not be circulated.

The industry already voluntarily removes consumers from direct-marketing lists when consumers request it.

Federal law requires credit bureaus to respond to consumers within a reasonable time.

Getting credit

A bill passed by the General Assembly gives consumers greater access to their credit reports. Here are key provisions:

* Require credit bureaus to provide one free report a year to consumers upon written request.

* Bar credit bureaus from charging more than $5 for second credit reports.

* Require credit bureaus to respond to consumer requests for records in 30 days and correct any inaccuracies or defend the report within 60 days.

* Require credit bureaus to provide the consumer with the names and addresses of the businesses or other suppliers of credit information in cases of disputed information.

* Allow the consumer to stop a credit bureau from disseminating his or her credit history to mail-order and other marketing services.

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