The government has established The Credit Repair Organization Act to protect consumers from dishonest practices. This article explains in brief what that act does, while providing tips for how you should begin to deal with credit repair service.
Your Credit
Introduction
Many people choose to work with a credit repair service to overcome their bad credit history. These companies promise to provide services, which can help to improve a person’s credit. While it’s true that a legitimate credit repair organization can help repair bad credit, it’s also true that there are dishonest companies offering these same services. These unscrupulous companies may use illegal and dishonest methods, and might charge unnecessary fees that will make your credit situation even worse than it was before.
The Credit Repair Organization Act
To protect the public from dishonest companies and illegal practices, Congress enacted the Credit Repair Organization Act. This act helps to protect consumers using credit repair organizations by making them aware of their rights. Consumers can then make better decisions when considering credit repair, and are more aware and informed about business practices that exist within the industry.
Rules And Restrictions That Govern Credit Repair Companies
When working with a credit repair company, it’s important to understand your rights and the restrictions that govern the credit repair industry. Credit repair companies are restricted from engaging in any illegal activities, such as altering your identity in order to clear your credit history. They are also restricted from any sort of dishonesty in regards to reporting your credit history. Credit repair companies are not permitted to collect any fees prior to a contract being signed and in effect, and they have to clearly represent the services that they are proposing to you.
They are also legally required to provide you with a copy of the “Consumer Credit File Rights Under State and Federal Law”, which informs you of your rights in regards to credit reporting. These include your right to obtain your credit report and pursue a dispute on your own, without the assistance of a credit repair agency.
This disclosure also details what your rights are if the Credit Consumer Organization Act is violated, which includes your right to sue the organization that committed the violation.
Requirements For Working With A Credit Repair Organization
You will be given a contract to sign before working with a credit repair agency. This contract should detail the services that the company will be performing for you, as well as stating a due date or time period for the completion of the services.
The contract must also clearly state the cost of the services and inform you of your right to cancel the contract within three business days if you change your mind. A “Notice of Cancellation” form should be included with your contract, which you can fill out and return within three days to legally cancel the contract. If you cancel within the designated timeframe, you cannot be charged for any services proposed, nor can you be charged for the cancellation itself.
Some disreputable companies try to get around the Credit Repair Organization Act by pressuring consumers to sign a waiver. If you are asked in any way to waive your rights, you should report this violation, as well as any other violations of the CROA that you encounter.