Credit Repair Organizations Act

Credit Repair Organizations Act is a title passed to ensure that prospective buyers of the services of credit repair organizations are provided with the information necessary to make an informed decision regarding the purchase of such services; and to protect the public from unfair or deceptive advertising and business practices by credit repair organizations.

Signed into law in September of 1996, the Credit Repair Organizations Act (CROA) was passed to help regulate the credit repair industry in order to protect you from the unscrupulous practices common to a credit repair scam.

The credit repair industry had come under heavy fire from legislators and the media because of a number of credit repair clinics who were taking advantage of consumers desperate for a solution to their bad credit. Instead of passing anti-credit repair legislation that would ban fraudulent and legitimate credit repair services alike, Congress passed CROA.

As a result of CROA, credit repair organizations are not permitted to misrepresent the services they provide to you including guaranteeing the removal of negative credit listings. Credit repair organizations are also not permitted to attempt to create a “new” credit file or advise you to lie about your credit history. Finally, credit repair companies are not permitted to accept payment until services have been performed. That’s why LTJ Credit Boost collects payment one month at a time but only for promised services already completed — i.e., for legal interventions previously dispatched.

In addition to defining prohibited practices, CROA also states that credit repair organizations must present you with a properly constructed credit repair contract, must allow you to cancel service within five days of signing the contract with any penalty or obligation, and must provide you with a disclosure statement titled “Consumer Credit File Rights Under State and Federal Law” that informs you of your rights to order your credit reports, dispute the accuracy of the information in your credit reports yourself, and to sue a credit repair organization that violates CROA.

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