{"id":352538,"date":"2016-04-04T10:42:05","date_gmt":"2016-04-04T15:42:05","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/consumer\/credit-banking-finance\/credit-repair-organizations-act-what-you-need-to-know.html"},"modified":"2024-02-01T12:31:01","modified_gmt":"2024-02-01T17:31:01","slug":"credit-repair-organizations-act-what-you-need-to-know","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/consumer\/credit-banking-finance\/credit-repair-organizations-act-what-you-need-to-know.html","title":{"rendered":"Credit Repair Organizations Act: What You Need to Know"},"content":{"rendered":"\n
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Credit Repair Organizations Act: What You Need to Know<\/h1>\n
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\n By Olivia Wathne, J.D.<\/a> | Legally reviewed by Melissa Bender, Esq.<\/a>\n | Last updated\n
\n \n <\/i>\n Legally Reviewed\n <\/summary>\n\n
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This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

\n \n <\/i>\n Fact-Checked\n <\/summary>\n\n
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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n

The Credit Repair Organizations Act<\/a> (CROA) is a federal law that regulates the credit repair industry. The credit repair industry includes businesses and services that enhance a person’s credit rating. Credit repair organizations help remove negative information from a person’s credit report. The CROA makes it illegal for a business to falsely claim its ability to "fix" a person’s credit report or credit score. These companies must provide accurate information and disclosures in the credit repair process<\/a>. Violation of CROA can lead to significant legal consequences.<\/p>\r\n

How Credit Scores Work<\/h2>\r\n

A credit score is a number that gives lenders an idea of a person’s creditworthiness. Lenders consider a person’s credit score<\/a> very important. A low score means a person is a high-risk borrower. A high score means they are less likely to miss a payment or default on a loan. Credit scores range from 300 to 850. A score above 720 is excellent. A score between 620 and 720 is fair to good. The higher your credit score, the more likely you’ll be able to borrow money at a lower interest rate.<\/p>\r\n

It’s important to know your consumer rights under the CROA when dealing with credit scores and credit repair services. Your credit history, put together by credit bureaus and sent to organizations like FICO<\/a>, influences your credit score. Credit reporting agencies might have slightly different information. So, consumers need to know their rights and ensure fair treatment and accuracy in their credit information.<\/p>\r\n

Credit Repair Companies<\/h2>\r\n

Unfortunately, some organizations promise they can remove negative credit information from a person’s credit report. For example, such organizations have advertised<\/a> that they can delete references to repeated late payments of loans or even bankruptcies<\/a>. They may also charge an upfront fee for services you can perform yourself. Some have even attempted to get around a bad credit score by altering a consumer’s identity, such as getting a new employer identification number. The CROA protects people from such dishonest credit repair practices.<\/p>\r\n

What Is the Credit Repair Organizations Act?<\/h2>\r\n

In 1996, Congress passed the Credit Repair Organizations Act. This was in response to growing complaints about organizations fraudulently promising consumers to perform illegal services. Some of the protections the law offers consumers include:<\/p>\r\n