There are frequent ads on television for these types of companies. Credit repair organizations are for-profit businesses that promise to consolidate a person’s debts, help them find a way to pay off their debt, and repair their low credit score.

The federal Credit Repair Organizations Act (CROA) is a set of laws aimed at preventing credit repair organizations from engaging in unfair business practices, which can cause financial hardship to consumers, especially those of limited economic means or who are not savvy consumers. The goal of the law is to ensure that customers of credit repair organizations are provided with the information they need to make informed choices about what to do for their credit problems. It is officially Title IV of the Consumer Credit Protection Act (CCPA).

The CROA is designed to protect the public from deceptive advertising and deceptive business practices by credit repair organizations. It defines practices that are prohibited. It also requires disclosure of certain kinds of information to customers. There are also requirements for written contracts between credit repair organizations and their customers. The CROA imposes legal liability on credit repair organizations for violations of the CROA, penalties for violations and procedures for reporting violations.

The Fair Credit Reporting Act is another federal law dealing with consumers and credit. It gives consumers the right to an accurate credit report, and it allows a person to start a formal dispute with credit reporting agencies about any inaccurate or incomplete information in their credit report.

Credit repair companies can review a person’s credit report, help identify negative or incorrect information, and then offer strategies for improving a person’s credit. They can write letters on behalf of a consumer to dispute incorrect information or ask for a goodwill review of an account’s history. They can follow up to make sure that any incorrect information is removed, and, in some cases, continue to monitor a person’s report to deal with any new incorrect information.

Before getting started, the credit repair company is required to let a person know about their rights to obtain a credit report on their own and dispute inaccurate credit report information on their own. Some credit repair companies also provide consumers with educational material, credit tools, and other items which could help the person maintain an improved credit score in the future.

When a person signs on with one of these organizations, they should also be aware of the practices that are prohibited by the CROA:

  • A credit repair business cannot make any false representations, or encourage a person to lie about their credit history or current credit rating when applying to a potential creditor for credit;
  • A credit repair business cannot attempt to lie, or make another person lie, about a person’s identity to a creditor, so that the creditor is not able to access a person’s real credit history or current credit rating;
  • A credit repair business cannot lie about or misrepresent any services they offer to their customers or say or do anything else that would constitute business fraud or deceit;
  • A credit repair business is not allowed to collect payment for any services that it has not yet performed. Instead, the organization can only collect payment after they have performed their end of the deal;
  • A consumer cannot waive any of their rights under the CROA.

A person who has been victimized by a credit repair organization or credit reporting agency should contact the Federal Trade Commission (FTC) and file a complaint with them. The FTC regulates the business practices of these types of organizations.

Are Credit Repair Organizations Required to Disclose Any Information?

Under the CROA, credit repair businesses are required to tell a customer certain information before the customer signs a contract with them, including:

  • A person does have a right to dispute what they feel is an error on their credit report by contacting the credit reporting agency, the credit repair business itself cannot remove current, truthful information from a person’s credit report. The credit repair business can only help to remove information that is older than 7 years, except for bankruptcy because bankruptcy stays on a person’s credit report for 10 years;
  • A person has a right to obtain a free credit report from the organization if they are unemployed, on welfare, or have been turned down for a job, insurance, or a rental in the past 60 days. The organization is required to help a person understand their credit report;

The credit repair organization must also supply a person with a written contract that must be signed and dated by the person before the organization can begin to work for them. And the contract must be agreed to and signed before the credit repair business can charge a person for any services. The contract should specify what services the organization is going to perform for the customer, as well as the deadline for completion of the services.

Can I Cancel a Contract with the Credit Repair Organization Once I Have Signed It?

As mentioned above, after a person has signed a contract with a credit repair business, the person has three business days after signing the contract to submit a signed cancellation form to get out of the contract.

Furthermore, the credit repair agency is not allowed to perform any services until the three-day cancellation period is complete. So, if a person has canceled their contract with a credit repair business, they should not be charged for any services.

Are There Other Ways to Repair My Credit?

Again, any person can dispute errors that they find directly with the credit reporting agencies themselves or directly with the company that reported incorrect information to the credit reporting agencies. A person can write a letter explaining the error and send copies of any proof they have to support their claim. This is called a “credit dispute letter.”

A person can get their credit reports for free from all three major credit reporting agencies at the website Also, the credit reporting websites allow a person to file a dispute online with a few clicks.

Another alternative to a credit repair business is consumer credit counseling. At most a person may pay a small monthly fee for the services of a consumer credit counselor. A person can turn to a counselor if they have more debt than they can handle and need help working with their creditors. A credit counseling agency works with a person’s budget to create a debt management plan that lowers their monthly payments to their creditors.

Working to repair one’s credit, whether a person does it on their own or with a credit repair business, takes time. So, a person wants to be patient with the process and maintain good credit habits while they are working to improve their credit score.

Are Credit Repair Organizations Legal in Every State?

Credit repair businesses operate legally in every state with one exception, Georgia. In Georgia, it is illegal to operate a credit repair business. The state can impose civil penalties on a credit repair business.

The penalties can include the payment of restitution to victims and fines to the state by companies that violate the law

Seeking Legal Help

If you have had an issue with a credit repair business, a credit reporting agency or debt collection agency, you should consult an experienced credit lawyer. Your lawyer can review your situation and then advise you of your rights. They can tell you if you may be entitled to compensation in a lawsuit, or if you have other options for protecting yourself.