What is the Credit Repair Organizations Act?

The Credit Repair Organizations Act is a federal law that became effective on April 1, 1997 in response to a number of consumers who had suffered from credit repair scams. In effect, the law ensures that credit repair service companies:

• Are prohibited from taking consumers’ money until they fully complete the services they promise.
• Are required to provide consumers with a written contract stating all the services to be provided as well as the terms and conditions of payment. Under the law, consumers have three days to withdraw from the contract.
• Are forbidden to ask or suggest that you mislead credit reporting companies about your credit accounts or alter your identity to change your credit history.
• Cannot knowingly make deceptive or false claims concerning the services they are capable of offering.
• Cannot ask you to sign anything that states that you are forfeiting your rights under the Credit Repair Organizations Act. Any waiver that you sign cannot be enforced.