What is the Credit Repair Organizations Act (CROA)?

CROA, codified at 15 U.S.C. §§ 1679-1679j, is the federal law that regulates credit repair organizations - companies or individuals who, for profit, offer to improve consumers' credit reports or scores. CROA requires written contracts, prohibits advance fees, mandates specific disclosures, and gives consumers a 3-day right to cancel any credit repair contract. It is enforced by the Federal Trade Commission and state attorneys general, and provides private civil remedies for consumers whose rights are violated.

Can I cancel a credit repair contract?

Yes. Under CROA § 1679c, you have an absolute right to cancel any credit repair services contract within three business days of signing the contract, for any reason and without penalty. The credit repair company must inform you of this right in writing before you sign. If you cancel, the company must refund any money you paid within three days of receiving your cancellation notice.

Can a credit repair company charge me before fixing my credit?

No. CROA § 1679b prohibits credit repair organizations from charging or accepting any payment before the services are fully performed. This prohibition applies to all forms of advance payment, including setup fees, enrollment fees, documentation fees, and any other charges before services are rendered. Any credit repair company that charges upfront fees is violating federal law and can be reported to the FTC and your state attorney general.

How do I report a CROA violation?

You can report a CROA violation to: the Federal Trade Commission at ReportFraud.ftc.gov, the Consumer Financial Protection Bureau at ConsumerFinance.gov/complaint, your state attorney general's consumer protection division, and your state's licensing board if credit repair organizations are licensed in your state. You may also file a private civil lawsuit under CROA § 1679g to recover actual damages, punitive damages, and attorney fees from the violating company.

Credit Repair Organizations Act (CROA) Guide: Your Rights When Using a Credit Repair Company

By Joeziel Vazquez, CEO & Founder - Credlocity Business Group LLC
FCRA Certified · BCCC · CCSC · CCRS · 17 Years · 79,000+ Clients · Philadelphia, PA

The Credit Repair Organizations Act (CROA), codified at 15 U.S.C. §§ 1679 through 1679j, is the federal law specifically designed to protect consumers from abusive, deceptive, and predatory credit repair companies. Enacted in 1996 and enforced by the Federal Trade Commission and the Consumer Financial Protection Bureau, CROA imposes strict requirements on any for-profit entity that offers to improve a consumer's credit report or credit score, or that offers advice on how to do so. Credlocity has operated in full compliance with every CROA requirement since its founding in 2008, because our founder Joeziel Vazquez built this company specifically to be the opposite of the fraudulent credit repair organizations that defrauded him and millions of other consumers before he founded Credlocity.

Who CROA Covers: Any For-Profit Credit Repair Company

CROA applies broadly to any person or entity that, in exchange for the payment of money or other valuable consideration, offers to improve any consumer's credit record, credit history, or credit rating, or offers advice or assistance to any consumer with regard to any activity or service for the purpose of improving a consumer's credit record, credit history, or credit rating. This is an intentionally broad definition. It covers large national credit repair companies like Lexington Law (now operating under CreditRepair.com), Credit Saint, Sky Blue Credit, and every other company that charges fees for credit repair services. It covers credit repair attorneys, credit coaches, and consultants who charge for advice on disputing credit reports. It covers mortgage brokers, real estate agents, and others who offer credit repair as a side service. Non-profit credit counseling agencies that provide credit repair services may be exempt, but most for-profit companies offering credit-related dispute services are covered by CROA. If the company you are working with charges a fee and promises to help you improve your credit, CROA applies.

CROA Required Disclosures Before Signing Any Agreement

CROA § 1679c requires that before any contract for credit repair services is executed - before you sign anything or pay anything - the credit repair organization must provide you with a separate written statement containing the Consumer Credit File Rights disclosure. This disclosure must inform you of all the following: you have the right to dispute inaccurate information in your credit report yourself, at no cost, directly with the credit bureau; you cannot legally have accurate information removed from your credit report before its natural expiration date; you have three business days to cancel any credit repair contract; and credit repair organizations cannot perform any services until the three-day cancellation period has ended. The disclosure must be provided in a separate document - it cannot be buried in the credit repair contract itself. This requirement ensures that consumers understand their own rights and the limits of what any credit repair company can legally promise before they spend any money.

No Advance Fees: The Core CROA Prohibition

CROA § 1679b(b) is the single most important consumer protection provision in the statute: no credit repair organization may charge or accept any money or other valuable consideration before it has fully performed the services it contracted to provide. This is an absolute prohibition. It applies to setup fees, enrollment fees, documentation fees, processing fees, and any other upfront charge, regardless of what name the company gives it. A credit repair company that charges any fee before completing the promised services is violating federal law, period. This prohibition exists because the credit repair industry was historically rife with companies that collected substantial upfront fees and then performed little or no actual work. By prohibiting advance payment, CROA aligns the financial interests of the credit repair company with the consumer's interest in results - the company only gets paid after it actually does the work. Any credit repair company that tells you it needs a setup fee, an enrollment fee, or any other upfront payment before starting work on your credit is violating CROA and should be reported to the FTC.

The 3-Day Right to Cancel Any Credit Repair Contract

CROA § 1679c gives every consumer the absolute right to cancel any credit repair services contract within three business days of signing, for any reason, without penalty, and without having to explain the reason for cancellation. The credit repair organization must notify you of this right in writing before you sign, and it must provide a separate cancellation form or notice that explains exactly how to cancel. If you cancel within three business days, the company must return any money you paid within three business days of receiving your cancellation notice. No credit repair work may begin until the three-day cancellation period has expired - CROA § 1679d prohibits the organization from providing any services during the three-day window. This provision gives consumers a meaningful cooling-off period to reconsider any credit repair agreement they may have signed under pressure or after an emotionally charged conversation about their credit problems.

Prohibited Statements Credit Repair Companies Cannot Make

CROA § 1679b(a) prohibits credit repair organizations from making or using any untrue or misleading representations in their advertising, marketing, or contracts. Specific prohibitions include: claiming that they can remove accurate, complete, and legally reportable information from a consumer's credit report before the statutory reporting period expires (this is impossible under the FCRA); guaranteeing specific outcomes such as guaranteed removal of all negative items or guaranteed credit score increases; implying that they have special relationships with the credit bureaus that give them superior ability to remove negative items; advising consumers to dispute accurate information by providing false statements or documentation to a credit bureau; and encouraging consumers to create a new credit identity using a Credit Privacy Number (CPN) or Employer Identification Number (EIN) to replace their Social Security number - this is credit identity fraud and a federal crime.

How Credlocity Complies With Every CROA Requirement

Credlocity Business Group LLC, founded in 2008 by Joeziel Vazquez in Philadelphia, PA, has helped more than 79,000 clients dispute and remove negative items from their credit reports. Joeziel Vazquez holds FCRA certification, Board Certified Credit Consultant (BCCC), Certified Credit Score Consultant (CCSC), and Certified Credit Repair Specialist (CCRS) credentials. With 17 years of hands-on experience, Credlocity provides every client with the required Consumer Credit File Rights disclosure before any contract is signed, provides the three-day cancellation right in every service agreement, charges no advance fees - your first 30 days are free - and never makes promises that violate CROA's prohibited statement provisions. Credlocity's CROA compliance is not a marketing claim; it is the operational foundation of how we run our business.

Start your free 30-day credit repair trial with no upfront fees. Your first month is free under Credlocity's CROA-compliant service agreement. See also: credit repair guides and FCRA articles on the Credlocity blog.

Frequently Asked Questions

What is CROA?: The Credit Repair Organizations Act (15 U.S.C. §§ 1679-1679j) is the federal law regulating for-profit credit repair companies. It requires written contracts, prohibits advance fees, mandates disclosures, and provides a 3-day cancellation right.
Can I cancel a credit repair contract?: Yes. You have an absolute right to cancel within three business days of signing, for any reason, with no penalty. The company must refund any payment within three days of receiving your cancellation.
Can a credit repair company charge me before fixing my credit?: No. CROA § 1679b prohibits all advance fees before services are performed. Any company charging upfront fees is violating federal law.
How do I report a CROA violation?: Report to the FTC at ReportFraud.ftc.gov, the CFPB at ConsumerFinance.gov/complaint, or your state attorney general. You may also sue under CROA § 1679g for actual damages, punitive damages, and attorney fees.