What is CROA?

The Credit Repair Organizations Act or CROA is a consumer protection legislation regulating how credit repair companies advertise to you. They must be clear about their services; however, they must not exaggerate them and take advantage of you.


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How Credit Repair Companies Must Conduct Business

  1. They must give you a written contract with the details of their services. They must fulfill the contract in its entirety before accepting payment from you.
  2. If you change your mind about using the credit repair company, they must allow you three days to withdraw.
  3. Although it seems counterproductive to their business, they must inform you that you can dispute items on your credit report for FREE.
  4. They must also inform you that you can sue them if they violate the Credit Repair Organizations Act terms.

*Please note that these details must be on a separate document from the rest of the forms. They must not be buried in the fine print.


How Credit Repair Companies Can Not Conduct Business

  1. They cannot accept any forms of payment from you before conducting all of the details in the contract first.
  2. They cannot legally remove anything from your credit report if the information is accurate. The information can only be removed after the statutes of limitations have passed.
  3. They cannot suggest that you falsify information to the credit bureaus. This is illegal, and you and the credit repair company will face legal repercussions.


The Bottom Line

Credit repair companies are not illegal. They provide convenience for people who lack the time or courage to fix their credit.

Beware of paying a monthly fee because they may keep you as a long-term customer costing you hundreds or even thousands of dollars. 

Remember, if the advertisement sounds too good to be true, it probably is.

Credit repair companies must follow the law. They cannot magically remove accurate information from your credit report or turn a bad credit score into an excellent score in 30 days.


Things you can do for FREE:


More Laws You Should Know

Fair Debt Collections Practices Act

Fair and Accurate Credit Transaction Act