Credit repair organization act or CROA is a subcategory of the Consumer Credit Protection Act, which aims to protect clients’ rights. President Bill Clinton signed this law in September 1996 to help consumers avoid further problems working with a credit repair company.

Until then, many credit repair organizations deceived many people by charging them a fraud. All these disasters happened due to a lack of relevant information. Therefore, the congress decided to establish a rule to protect consumers’ credit. In gist, the law ensures that the client is completely aware of what he or she is signing in the contract. Moreover, the credit repair company provides that it will charge the client only when they have done the service entirely.


Why is the Credit Repair Organization Act so important?

Credit plays a crucial role in American citizens’ financial lives. All over the USA, many people suffer credit problems and want to solve them. This issue makes a vast market for credit repair companies. Sometimes these credit repair companies are not as honest as they show.

Many fraud and scams are filed because the credit repair companies abused clients’ lack of information. Many credit repair companies deceived people by alluring commercial and made more financial problems for them. In 1996 the federal government decided to regulate the credit repair companies’ acts. Therefore, the federal government established the Credit Repair organization acts.


What commitments do the organizations make according to CROA?

1.    Justifying all the contract for the client

According to CROA, the credit repair companies promise to clarify every detail of the contract for the client. Usually, the items that credit repair companies mention in such agreements are complicated and specialized. After President signed CROA in September 1996, the credit repair companies are required by law to explain them in detail before the customer signs the contract.

2. Presenting a result before getting money

The Credit Repair Organization Act forces credit repair companies to present a result, before getting paid. This means that the company should achieve and show the estimated effect of the contract. Then the customer pays the fee mentioned in the agreement. This action actively prevents fraud and financial abuse.

3. Not to lie!

According to CROA, credit repair companies cannot guarantee absolute removal. You may have accurate or inaccurate negative information on your credit report. No credit repair company can guarantee to remove this information from your reports, even if they are incorrect.

4. No inducing!

Credit repair companies are not allowed by law to ask their customer to lie about their credit history. For instance, they cannot dispute a piece of accurate negative information by representing it as an error. Moreover, according to the Credit Repair Organization Act, the companies do not have the right to force their clients to file new credit lines.



Every year, many Americans hire credit repair companies to solve their credit problems. Before 1996, there weren’t any laws to regulate these companies’ actions. Therefore, many frauds and scams occurred. Because the credit repair companies abused people’s lack of knowledge about finance. In September 1996, President Bill Clinton signed the Credit Repair Organization Act, which regulated credit repair companies’ actions as well. Moreover, this law prevented consumers from more losses.

If you are looking for a credit repair company, study about your rights, next, make sure that you are getting your rights as well. Furthermore, make sure that you are entirely aware of all the items credit repair company mentions in the contract before signing anything. For further information, you can contact our credit specialists for a free credit counseling.


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