Maintaining a strong credit history and score is the foundation of a healthy financial life, but for millions of Americans, keeping credit in check in easier said than done. A money misstep, like a missed payment or an account that made its way to collections, can happen to anyone, and it is necessary to work toward repairing your credit profile when these issues arise. Credit repair, or the process of rebuilding your credit history and improving your score, is a step in the right direction when the challenge of mending your financial life is too difficult to face alone.
Seeking the help of a professional credit repair organization gives you an opportunity to boost your credit standing and potentially move on with your financial life in terms of securing new credit from various lenders. However, not all credit repair companies are on the up and up. In an effort to protect consumers from bad actors in the credit repair marketplace, the Credit Repair Organizations Act was established by the federal government. You’re able to get the most of your credit repair assistance when you know and understand your rights under this valuable act.
Consumer Protections under CROA
Through the Credit Repair Organizations Act, the term credit repair organization refers to any person who provides a service in exchange for payment, including improving an individual’s credit record, history, or overall rating. Under CROA, consumers have explicit protections to ensure they are not paying for the performance of a service that may be fraudulent or less than promised. Those protections include the following:
- No statements that are untrue or misleading regarding a consumer’s creditworthiness or standing can be made during the process of credit repair
- No practice or course of business that represents fraud or deception either to the consumer or the credit reporting agencies is allowed
- No organization may charge a fee or receive payment prior to performing credit repair services
- A disclosure statement explaining that consumers can repair credit on their own, without the help of a credit repair organization, is required
- Services promised by a credit reporting agency must be provided in written contract form, signed by the consumer
- The credit repair contract must include a complete list of services to be performed and a reasonable date by which those services will be complete
Also, consumers have the right to cancel a contract without penalty or obligation so long as it is done within three business days of the contract date. Any credit repair organization or individual offering credit repair services independently may be responsible for liability compensation should one or more of the provisions of the Credit Repair Organizations Act be violated.
The purpose behind CROA is to adequately inform consumers that credit repair can be accomplished without the help of a credit repair organization and without added cost. However, when you’re faced with several credit issues that need to be resolved or find you don’t have the time to complete the necessary steps to mend your credit accurately, credit repair organizations can be incredibly helpful. Before running to a credit repair organization for assistance, know your rights under CROA, and understand what you can realistically expect throughout the process.
