The Credit Repair Organizations Act (CROA) is a federal law that regulates credit repair organizations in the United States. One of the most important things CROA did was to make it illegal for credit repair organizations to make false claims. Don't worry, it's easy to stick to the rules once you become familiar with the law. Having a good credit score is important.
Without it, you may be denied low-interest loans and lines of credit, a job, a rent, and even an insurance policy. If your credit report shows a history of debt problems or contains errors, you may consider using a repair service to “clean” it. However, before you pay, know how these companies work. In the vast majority of cases, hiring an external company will only waste your money.
Your credit is important, so it's worth checking your credit reports periodically to make sure the information they contain is correct. The best credit repair companies will have an A+ rating from the BBB and promise a 90-day money-back guarantee and unlimited disputes. The methods they use to make phone calls, send letters, and send forms are the same methods you can use to repair your credit. Congress passed CROA in 1996 after consumer oversight organizations such as the FTC discovered high rates of consumer abuse in the credit repair industry.
The first step in repairing your credit is to find out what has damaged it and how bad the damage is. The Fair Credit Reporting Act (FCRA) requires credit bureaus to investigate dispute validations within 30 days of receipt. If a credit repair company promises to remove a valid negative element, then the company is not legitimate. In other words, only a credit repair lawyer authorized to practice in that state is legally authorized to file disputes on your behalf.
Some state laws define terms and reiterate business and financial sector laws as they relate to credit repair organizations operating within their state. To avoid being scammed, make sure that a credit counselor is accredited by the National Foundation for Credit Counseling (NFCC). Regardless of the price, credit repair services cannot accept payments on your part before the services are provided to you. Many states prohibit any payment by the customer before the credit repair organization provides the services.
A bond is a three-part agreement that legally binds your credit repair company (which needs the bond), the state (which requires the bond), and a bail bond company that sells the bond. You can learn more about DIY credit repair on Upsolve and through numerous books that are on the market. Starting a credit repair business is simple, but you risk losing everything if you don't follow the rules and regulations.