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What Is the Credit Repair Organizations Act?

November 14th, 2016 · No Comments · Credit Repair

by Kristy Welsh

(Last Updated On: August 25, 2017)

What Is the Credit Repair Organizations Act?

For 20 years, the Credit Repair Organizations Act (CROA) has been protecting consumers from abuses in the credit repair industry. While there are legitimate credit repair companies out there, far too many violate the rights of consumers, often making their financial situation worse than when they started. Thus, the importance of CROA.

About the Credit Repair Organizations Act

The CROA is Title IV of the Consumer Credit Protection Act, a statute signed into law in 1996.

Thanks to the CROA, credit repair companies are prohibited from:

  • Making untrue or misleading statements
  • Advising you to make untrue or misleading statements
  • Advising you to change your identity or lie about your credit history
  • Demanding upfront payment for services that have yet to be completed

And thanks to the CROA, credit repair companies are required to:

  • Disclose to you the “Consumer Credit File Rights Under State and Federal Law,” outlining consumer rights that include the following:
  • Provide to you a written contract outlining the services you are paying them to do for you
  • Honor your requested cancellation of services, provided it comes within 3 business days of your signing the contract

When the CROA Is Violated

Any company failing to follow the CROA is considered in violation of the Federal Trade Commission Act. If you believe a credit repair company has violated your consumer rights, submit a complaint to the FTC.

Learn more about consumer protection laws and agencies.

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