The Credit Repair Organizations Act (CROA)
What you need to know.
Signed into law in 1996 by President Clinton, is actually part of the Consumer Credit Protection Act. It requires companies offering credit repair services to be transparent and honest in their dealings with consumers. It forced businesses to stop taking large amounts of money from their customers, promising to do things they either could not do or had no intention of doing.
A frustrating situation for many is having bad credit. Many of the things that were simple to accomplish become difficult if not impossible tasks. For example obtaining a loan for a car, a mortgage or credit cards, can be impossible to obtain for somebody without good credit. Many businesses saw this as an opportunity to make money by taking advantage of individuals who were in these situations. They would charge high upfront fees, then do practically nothing to help them. As a result, this law was passed by Congress to help protect the consumer.
This law became effective on April 1, 1997, it was created in direct response to the number of consumers who suffered from credit repair scams. The act now protects you and gives you the right to work directly with a credit repair or reporting agency to challenge any inaccurate or incomplete information in your credit report knowing you are protected from Credit Repair Company that might otherwise want to take advantage of you. Know your rights.
Credit Repair Organizations Act (CROA)
What you need to know Under the act, credit repair service companies:
- Can not take your money until they fully complete the services they promised.
- They can not engage until they give you a written contract stating all the services they will be providing and the terms and conditions of payment. Under this law, consumers have three days to withdraw from the contract.
- It’s illegal for them to suggest or ask that you mislead or lie to the credit bureaus about your accounts or alter your identity to change your credit history.
- Cannot knowingly make deceptive or false claims concerning the services they are capable of offering.
- Finally they cannot ask you to sign anything that states that you are forfeiting your rights under the Credit Repair Organizations Act. Any waiver that you sign is illegal and cannot be enforced.
CROA requires companies to notify their customers that they themselves can do the exact same thing the credit repair company will do, to repair their credit. The choice to use a Credit Repair Company is individual for many reasons, such as how comfortable they are with the ability to handle the process or do they have the patience to carry it thru to the end. There are many benefits that are a direct result of this law. No upfront fees, no hidden fees or penalties and questionable practices. Whichever the case may be, be assured the CROA is there to protect you.