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Who Can Fix Your Credit?

Updated: Aug 11, 2021

It’s important to note that credit repair is legal in all 50 states. There’s a federal law that

guarantees consumers the right to dispute information in their credit report to have it corrected. There’s also a federal law that outlines how credit repair companies can provide services to consumers. These two laws basically set the foundation for how credit repair works in the U.S.

Credit repair companies themselves are not illegal, but they must abide by certain rules and laws if they are to be trusted. The Credit Repair Organizations Act (“CROA”) is a federal law that protects consumers from unfair and deceptive practices by credit repair organizations. Many states also have their own laws that regulate credit repair organizations.

For example, credit repair companies in Florida are overseen by the state’s Office of Financial Regulation. Both the Office and Chapter 817.7005 of the state’s Statutes require credit repair companies to obtain a $10,000 credit repair surety bond. According to state law, Florida credit repair companies are not permitted to charge upfront fees to clients unless the company has first obtained a credit repair surety bond.

Credit Repair Organizations Act Prohibits

  • Lying or advising consumers to lie about their credit history.

  • Altering consumers identity, applying for a new EIN or creating a new identity or attempting to obtain false credit history.

  • Misrepresenting the services they provide.

  • Asking consumers to pay for services before they have been provided.

Credit Repair Contract Requirements

Before a credit repair company can perform any services, they are required to provide a contract signed by the consumer and the contract must include the following:

  • A disclosure called “Consumer Credit File Rights under State and Federal Law” that advises consumers of their rights.

  • A description of the services that will be performed to repair your credit.

  • An estimate of the time it will take to complete the services (or a date by which the services will be completed)

  • A visible statement letting you know you can cancel the contract within 3 business days

  • Duplicate Notice of Cancellation forms

How can you spot an illegal or unethical credit repair organization?

  1. Making guarantees about things outside of its control. Credit repair organizations may not make any untrue or misleading representations about their services (CROA § 404).

  2. Charging in advance for work not yet completed. Under CROA, credit repair organizations may not require payment until they have rendered services.

  3. Suggesting that you cannot do credit repair on your own. You have the right to dispute inaccuracies in your credit report on your own. There is nothing a credit repair service can do legally that you cannot do by yourself.

  4. Failing to provide you with a written contract. Credit repair organizations are required to provide a written contract before services can be rendered. The contract must contain specific terms, such as the terms of conditions of payment, a description of the services to be performed, and a statement indicating the consumer’s right to cancel without penalty within three business days (CROA § 406).

  5. Suggesting creating a new or altered identity so you can start new with your credit. It is illegal to create a new credit profile (for example, by obtaining a new social security number or other identifier) to hide past negative history (CROA § 404). Any credit repair organization that suggests this course of action is not trustworthy.

  6. Nothing is free. Note that with free credit repair services such as Credit Karma and the like, sell your information to other companies to market to you. Companies such as debt relief companies, Banks, mortgage companies, and credit card companies pay for lists of potential customers. And this is how the service is free for you.


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