By
Sybria White on October 7, 2010
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.