Time is not on your side when it comes to your credit report

Consumers beware -- if you've been careless about checking your credit report, it's time to change.

The U.S. Supreme Court, in a unanimous decision, upheld a federal law that says consumers whose credit rating is damaged because of an error by a credit-reporting agency have only two years from the time the error is made to file suit.

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"We're disappointed that the Supreme Court has limited a consumer's right to hold a credit bureau accountable for destroying their financial life," says Mark Ferrulo of the Florida branch of the Public Interest Research Group.

"We think the statute of limitations for seeking remedy against credit bureaus should begin when the mistake is discovered by the consumer."

The time limit, upheld by the Supreme Court, does not apply if a credit-reporting agency has "willfully misrepresented" information.

The court ruled on a case involving a woman named Adelaide Andrews. In June 1993, Andrews visited a doctor's office, filled out a form listing basic information including her Social Security number. The receptionist, named Andrea Andrews, copied the data and opened credit accounts using Adelaide Andrews' Social Security number and her own last name and address.

Adelaide Andrews found out about the fraudulent activity in May 1995 when she tried to refinance her mortgage. She sued credit-reporting bureau TRW in October 1996.

A district court judge barred her claim, saying more than two years had elapsed since the fraudulent activity occurred. A federal appeals court reversed that decision, applying what it said was considered to be the "general federal rule" that a statute of limitations starts running when a person "knows or has reason to know she was injured."

The Supreme Court overruled that decision and sided with the time limits set in the Fair Credit Reporting Act.

Identity theft is a major way an innocent person's credit rating can be harmed.

Donald Girard, spokesman for the Experian credit-reporting agency, says extending those limits would allow identity thieves more time to steal and would make it more difficult to find and prosecute the culprits.

"This is a shared responsibility. The consumer bears a certain amount of responsibility to look at their credit report and if something doesn't look right, report it. We, then, have the responsibility to examine the situation and correct any errors as soon as we can."

PIRG's Ferrulo says credit bureaus should be held accountable because they have much better tools than consumers do to determine when identity theft may be occurring.

"The nature of the crime lends itself to a long period before discovery. Most victims don't find out for well over a year and, in many cases two years, that their identity has been stolen. The reason the crime is able to occur is often because of a breakdown in vigilance by credit bureaus."

Beth Givens of the Privacy Rights Clearinghouse says she hopes the Fair Credit Reporting Act will be changed.

"Even if the Supreme Court decision was the other way -- that you have two years from time of discovery -- even that is a short amount of time. I think the FCRA will have to be amended to show the reality of the identity theft victims' experiences."

There's no sign that identity theft is slowing down. Consumers can help themselves by guarding their personal information and by checking their credit reports on at least an annual basis.