Released: January 17, 2019

Help Desk FAQ

Can credit repair organizations collect fees upfront?

Not legally. Under the Credit Repair Organizations Act (CROA), a credit repair organization (CRO)—any person or company that makes money by promising to improve a consumer's credit report or score—must fully perform the promised service before receiving any payment. CROs must provide you with a written contract with the following provisions:

• a detailed description of the services to be provided
• payment terms, including the total amount
• any and all guarantees
• date or length of period service will be completed
• CRO’s name and principal business address

You must receive a copy of the “Consumer Credit File Rights Under State and Federal Law” before you sign anything with the CRO. There is a three-day “cooling off” period, during which you can cancel the contract without paying any fees.

Ultimately, we would recommend that consumers never pay a company to fix their credit. At best, you will spend hundreds (or perhaps thousands) of dollars on something you can do yourself for free. Other times, the company will simply take your money and disappear. Some credit repair outfits even encourage unsuspecting consumers to engage in illegal activities, such as “file segregation” (manufacturing a bogus identity to set up additional credit files), which can result in the consumer facing criminal penalties.

If you believe that a CRO has violated the law, you can file a complaint with your state Attorney General and the Consumer Financial Protection Bureau. You can also file a lawsuit against the CRO for actual damages, punitive damages, costs and attorney's fees for violations of the CROA.

Click here for more information on the CROA and how to repair your credit yourself.