Is Credit Repair Legal?

by | Nov 3, 2023

For those searching for assistance with their less-than-great credit score, credit repair is certainly an option to consider. However, before working with just any company, it is important to determine if the company is operating within the boundaries of the law. What many individuals with bad credit don’t realize is that repairing their credit is legal when it is done within the confines of the law as dictated by the Credit Repair Organizations Act (CROA). This federal act deems fit what credit restoration companies are permitted and not permitted to do when it comes to fixing credit scores and eliminating debt. Take a look at some of the important stipulations that these companies are required to adhere to by the (CROA):
  • A clear and detailed contract must first be received by the individual seeking credit repair services prior to any repair company performing services for them. It is typical for these contracts to include a description of the services to be performed, payment for these services, and a time frame for completion.
  • Repair organizations are never permitted to ask for payment before providing service to an individual. Any company that asks for upfront payment for their services should be avoided, as these could be potential scams.
  • Companies should never alter the identity of their users or attempt to illegally modify their credit history. All restoration services should be performed within the confines of the law, without misrepresenting the client or their history.
  • Services that are provided to an individual by a credit restoration company can never be misrepresented. This means the services provided by the company must be those that are discussed with the individual seeking their services, no less.
  • Repair companies that attempt to misrepresent or lie about an individual’s credit history are breaking the law.
Any individual who is looking to work with any credit repair service should first gain some insight into what the Credit Repair Organizations Act explains as the restrictions of the repair company and the rights of the individual seeking their service. There are numerous scam credit restoration companies that exist so, it is important to be aware of the legal restrictions placed on the type of service you are looking for. If for any reason a company is not operating within these specific guidelines, the individual should certainly report them to their state attorney general.