The term credit repair most commonly refers to the identification and dispute of credit reporting errors; in a wider sense, it also includes a strategic reshaping of one’s credit profile for the purpose of optimizing credit scores.
What Do Credit Repair Companies Do?
- Help identify erroneous items on your credit report
- Manage the dispute process
- Suggest a credit management plan to raise your scores
The federal law that governs the credit repair industry is called the Credit Repair Organizations Act (CROA). CROA prohibits certain practices including the following:
What Are Credit Repair Companies Not Allowed to Do?
- Accept pre-payment for services; for example, it would be illegal to offer a lump-sum six month membership
- Make promises about results; for example, it would be illegal to make the statement, “we can delete anything”
- Make deceptive representations; for example, it would be illegal to offer a money-back guarantee, but hide the list of conditions