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Credit Repair Organizations Act

What is the Credit Repair Organizations Act? (CROA)

The Credit Repair Organization Act was put in place to protect consumers from unscrupulous practices by organizations who claim to repair credit. The Act seeks to ensure that consumers who decide to use credit repair services are aware of their rights and are able to make an informed decision about choosing to pay a credit repair company.

With the increasing importance of your credit score to make purchases, those who have experienced credit problems have been turning to various credit repair organizations to help improve their credit.

Watch Out for the Bad Credit Repair Companies

Unfortunately, there are credit repair companies that use unethical practices to improve their clients’ scores and take advantage of the consumer.

The Credit Repair Organizations Act (CROA) was put in place to make sure that the consumer knows their rights before choosing to work with a credit repair company.

This is one Act that really works for consumer. In fact, in 2008, the Federal Trade Commission shut down 34 credit repair organizations for violations of the CROA.

The Most Important CROA Rule to Remember

The biggest takeaway from CROA is that a credit repair company must clearly explain the payment structure to consumers seeking their help.

The best thing to remember is that you should not be giving any payment before any services have been performed. Setup or upfront fees directly violate the rules of CROA.

Before Choosing a Credit Repair Company

Don’t be scammed. Make sure you know what credit repair companies can and cannot do with your credit before making a choice.

Before you select the credit repair organization you will use to help improve your credit, make sure that they provide you with the following:

  • A contract that allows you 3-days to cancel if need be.
  • A clear description of services they will provide
  • Listing of payments required once services are rendered and the payment schedule
  • A deadline or estimate of time that all services will be completed

What Can a Credit Repair Agency Really Do For Me?

Credit repair is a possibility. But it is important to know that a lot of companies out there are not looking out for your best interest. This is why you need to understand your rights before selecting a credit repair options. Remember, there is nothing a credit repair agency can do that you can’t do yourself.

A good credit repair company can help you:

  • Dispute any inaccurate information by sending the appropriate letters
  • Get copies of your credit reports
  • Deal with any issues that may be on your credit report by sending in any necessary paperwork

What are These Companies Prohibited from Doing Under CROA?

The Credit Repair Organizations Act makes it clear that these companies cannot partake in deceptive advertising and is prohibited from using numerous unethical practices. These include but are not limited to:

  • Lie about your credit history
  • Alter your identity in any way
  • Lie about the service they will provide to you
  • Have you pay for service before they have been completed

Want more information? Check out the government’s CROA page.

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