What is the Credit Repair Organizations Act?

Many credit companies are available for credit repair but not all are created equal. Some credit repair companies are legitimate and provide helpful resources.
However, some companies are illegitimate and can offer more harm than help. To decipher one company from the next, it is in your best interest to be knowledgeable of the Credit Repair Organizations Act.

The Credit Repair Organizations Act protects consumers from what credit repair organizations or CROs say about them. More specifically, this law prohibits false statements, fraud and misleading statements. It is important to know the details of this act because it directly affects you as a consumer.

The title of this article may be Credit Repair Organizations Act, this piece of legislation is not an act at all. It is actually a title, that was signed into law in the late 1990s. This law was created to respond to the many credit repair scams out there.

One popular way credit repair companies have tried to take advantage of consumers in the past is by charging them before services are rendered. In response, to this exploitation and other types of exploitation, the federal government created the Credit Repair Organizations Act. Under this title, companies cannot “misrepresent the services they provide to you including guaranteeing the removal of negative credit listings.” In addition to these prohibitions, the title also bans credit companies from advising you as a consumer to lie about financial information or to create a new credit identity.

These prohibitions and others outlined in the CROA are also red flags of a scam credit company that are helpful to be aware of.

In addition to outlining the things legitimate credit companies are permitted to do, the CROA also reinforces and outlines your rights as a consumer. For example, the CROA states that credit companies must represent you with a credit repair contract. Under the contract you are permitted to cancel service within three days and it should include a disclosure explaining your rights under state ad federal law.

In conclusion, the CROA is very helpful for a number of reasons. Firstly, it lists your rights as a consumer. Additionally, it protects your rights and keeps you aware of how to detect red flags with illegitimate companies.

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Sybria White

Sybria White is a senior at the University of North Carolina at Chapel Hill. Upon graduation in May 2010, she will leave Carolina with a Bachelor’s Degree in Sociology, a Certificate in Career Development and will be awarded a Public Service Scholar. She plans to attend graduate school to pursue a Master’s Degree in Public Health following taking a year off to contribute to a National Service Program, such as AmeriCorps. Her undergraduate career has taught her the value of a sociological perspective, which has influenced her dedication to public service. She is a volunteer for W.D. Hill Recreation center, Peer mentor for minority students and has served as an active member of several campus organizations such as Sociology club, North Carolina Health Careers and Access Program, Community Government, and Minority Advising just to name a few.

Apart from contributing public service and active involvement on campus, Sybria is very passionate about creative writing and writing in general and hopes to bring a sociological point of view to her articles. Her interests outside of writing and public service include reading books concerning fashion and spending time with her family.

A well rounded curriculum involving Business and English academics in addition to sociology, have helped shaped this young writers’ unique voice. She is eager to share her newly acquired skills and looks forward to helping others approach every day problems from a new, and perhaps, sociological outlook.

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