WASHINGTON (AP) – Consumers would be able to receive free annual reports detailing their credit ratings under a proposal gaining strong support in Congress.

Lawmakers have also proposed a system that would allow a person, with a single phone call, to trigger a nationwide alert on his own credit if he fell victim to identity theft.

The Bush administration on Wednesday urged Congress to act quickly to strengthen the nation’s credit laws, warning that identity theft has already claimed 12 million victims in the United States and could hurt an additional 1 million this year.

Identity theft involves the use of a person’s name and other personal information, such as a Social Security number or bank and credit card numbers, to establish credit or buy products.

“Identity thieves are clever, adaptable and heartless,” Treasury Secretary John Snow told the House Financial Services Committee. “Many identity thieves target the most vulnerable members of our society: families of the recently deceased, seniors, hospital patients and men and women serving our nation overseas.”

To combat identity theft, the administration proposed allowing all Americans free access each year to their credit reports so they could spot errors, including those that may have occurred from fradulent use of the consumer’s financial information.

Only six states – Colorado, Georgia, Maryland, Massachusetts, New Jersey and Vermont – now require the nation’s three major credit bureaus – Equifax Inc., Experian Information Solutions Inc. and Trans Union – to give consumers free credit reports every year.

Under the federal law, consumers currently have the right to receive the free reports only if they have been denied credit or employment based on information contained in the credit report or have been the victims of fraud.

The administration’s proposal would also increase surveillance by banking regulators to ensure that banks and other financial institutions are doing everything they can to guard against identity theft.

The changes Snow recommended are similar to proposals included in a bipartisan bill sponsored by Reps. Spencer Bachus, R-Ala., Darlene Hooley, D-Ore., and 31 other members of the House.

Congress must address the issue this year because the 1996 provisions that instituted uniform reporting requirements under the 1970 Fair Credit Reporting Act are due to expire at the end of 2003.

Snow praised the legislative effort and said the administration was eager to work with lawmakers to resolve areas of disagreement between the two proposals.

One of those areas involves whether consumers would have the right to see their individual credit scores, which would be required by the Bachus bill but not by the administration.

Consumer advocates contended that neither the administration proposal nor the Bachus bill goes far enough to provide adequate consumer protections, particularly in the area of keeping inaccurate information out of the reports.

“Broad, comprehensive reforms are necessary to guarantee that credit reports and credit scores are accurate, that the privacy of consumers is maintained and that identity theft is stopped,” Stephen Brobeck, the executive director of the Consumer Federation of America, told the committee.

He and other consumer groups objected to a measure in the new legislation that would continue a current pre-emption of tougher state laws in this area.

However, Snow and Federal Trade Commission Chairman Timothy J. Muris, who testified in favor of the administration bill, said uniform federal requirements were essential to allow a mobile American population to be able to obtain credit regardless of where they decide to move.

The administration proposal would also amend the law to make it easier for consumers to say no to unsolicited credit offers. Snow said that too often consumers’ options are hidden from view by financial institutions seeking to sign up new credit card holders.

AP-ES-07-09-03 1838EDT