About the Credit Repair Organizations Act

What is commonly referred to as the credit repair organizations act is actually Title IV of the Consumer Credit Protection Act.

There is a portion of this Title IV that reads as follows: “no credit repair organization may charge or receive any money or other valuable consideration for the performance of any service which the credit repair organization has agreed to perform for any consumer before such service is fully performed. ”

What this means is explained in the following bullet points:

• It means that up-front fees are illegal. Also illegal are any charges made before the services outlined in the contract are completed.
• Sometimes 'free' credit repair services in return for purchasing other monitoring tools are misleading or a scam. This could be illegal because forbids “other valuable consideration” in exchange for credit repair services.
• It simply serves as a warning to people the following: Before agreeing to do business with a credit repair organization, you should find out if the company has a pattern of complaints. Your local consumer protection bureau such as Better Business Bureau can help in this regard. You could also find out if complaints are logged at the Security and Exchange Commission or other government websites.

Avoiding Credit Repair Scams

You could very easily become scammed by credit repair companies. However, becoming a victim of fraud can be avoided.

One way to reduce the possibility of a scam is to carefully read terms and conditions of a credit repair company. It should be posted on the website where items such as credit reports or credit scores are found.

Who This Affects?

All types of people seek credit repair. For instance, people who have gone through divorce or separation, as well as people who share financial accounts may seek such options.

Co-signers or authorized users of accounts may also seek credit repair options. I any case, it is because incorrect, incomplete, or obsolete information is recorded on credit accounts.

These are people who need to beware of the possibility of credit repair scams. These are the type of people who need to review documentation such Title IV of the Consumer Credit Protection Act.

They also are advised to read documentation of the Fair Credit Reporting Act (FCRA). Revisions of this include info about the Free Credit Report Rule. Every consumer seeking credit repair has a right to see their files pertaining to their financial history once every 12 months.