The Pupose of CROA – Credit Repair Organizations Act

The Credit Repair Organizations Act (CROA) was created to protect consumer’s rights to dispute inaccurate negative information on the credit report. The Act was put in place for credit repair companies that promise they can remove negative credit and restore your credit rating to good standing. Because of illegal activity that these companies process, consumers are urged to report damaged data on there personal credit report to all institutions and all three Credit Bureaus. The Act also provides information for consumers before they choose to run with any repair agency.

Some of the things credit repair agencies are not allowed to do; present false information to all institutions seeking collections, establish new credit under a false name, lie about the process of services provided and require you to pay upfront before any service are performed.

CROA also insures that you have the right to gain your credit report, which is required by the repair company to give, and dispute any activities that are not correct on your report.

During the credit repair application process, the company must give you a contract, signed and dated and the three business day cancellation time must expire first. They should include fees, what they will do to your credit report, a definite date of completed processing and a letter stating your right to cancel with the cancellation period.

Credit repair companies cannot penalize you for canceling your account within the given cancellation period. They have to respect your decision and supply you with a Notice of Cancellation to be completed and returned. Also, credit repair companies cannot require a signature to waive your rights of the contract. If you do sign, the contract will be null and void and no actions can be taken against the contract.

Credit repair agencies that undergo illegal activity of this nature can be sued for damages and time, reported to the FTC and shut down by the state they reside. All allegations of illegal conduct from any repair company must be filed within five years for an investigation to undertake.