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The Credit Repair Organizations Act — Definition + 3 Ethical Companies

Eric Bank 5/11/18

Imagine being excited about moving to a new city, but shocked when your application for an apartment is denied. Puzzled, you research your credit reports, only to find that someone has stolen your identity and run up thousands of dollars in unpaid debt on a car loan under your name! You’re now left scrambling for a place to live while trying to straighten out your credit, so you reach out to a highly-rated credit repair organization, and eventually, the incriminating information is removed from your credit report.

While this scenario is unfortunate in that your identity was stolen, it is fortunate in that you used a reputable credit repair agency to fix the problem. Had you instead used an illegitimate organization, your hypothetical misfortune would have escalated into a real nightmare. It was your selection of an organization that strictly adheres to the Credit Repair Organizations Act (CROA) that made all the difference.

Definition | Companies (3) | Report Violations

CROA Prevents Unfair Business Practices in Credit Repair

The 1996 CROA, which is Title IV of the Consumer Credit Protection Act, requires credit repair organizations to communicate honestly with consumers. It’s meant to punish dishonest companies that charge clients for services never rendered and to prevent false promises, such as removing accurate derogatory information from a credit report.

The Act came about as a response to evidence that credit repair organizations were cheating money out of consumers looking to improve their credit scores by claiming to remove negative items from credit reports.

The CROA provides consumers with several legal protections by directing credit repair organizations to adhere to rules, including:

  • Requiring these organizations to provide you all pertinent information about their services and fees before you sign an agreement
  • Telling consumers that credit repair was available without using the organization
  • Preventing upfront charges
  • Requiring the organization show proof of their activities before charging you for those activities

Consumers are also granted cancellation rights they didn’t previously have before CROA, and credit repair companies can only collect payment after services have been rendered.

Top 3 Compliant Credit Repair Companies

Credit repair organizations can help boost your credit score by correcting errors and removing negative items on your credit report that lower your score. The good ones know exactly how and when to communicate with the credit reporting agencies to fix incorrect and incomplete data on your credit reports. The organizations may also offer credit counseling, with an aim to reduce your debt and thereby raise your credit score.

The top three credit repair services, as evaluated by our experts, are as follows:

4.9 /5.0 Stars
  • Free consultation: 1-855-200-2394
  • Most results of any credit repair law firm
  • Clients saw over 9 million negative items removed from their credit reports in 2016
  • More than 500,000 credit repair cleints helped
  • Cancel anytime
  • See official site, terms, and details »
Better Business Bureau A+
In Business Since 2004
Monthly Cost $79.95
Reputation Score 10/10
Our Expert Review 4.9/5.0 (see review)

Lexington Law claims that it removes 85% of negative items on credit reports, and has deleted 7.5 million items in the last year alone.

4.5 /5.0 Stars
  • Free consultation: 1-855-200-2393
  • Average 40-point increase in Transunion credit score during first four months
  • Free access to your credit report summary
  • Three-step plan for checking, challenging and changing your credit report
  • Online tools to help clients track results
  • See official site, terms, and details »
Better Business Bureau A+
In Business Since 1997
Monthly Cost $99
Reputation Score 9.5/10
Our Expert Review 4.5/5.0 (see review)

CreditRepair.com claims an average increase of 40 points on TransUnion credit scores within four months while providing online tools to help you check your results.

4.5 /5.0 Stars
  • Free consultation: 1-888-805-4944
  • In business since 1989, A+ BBB rating
  • Quick pace: Sky Blue disputes 15 items monthly, track your progress 24/7
  • 90-Day 100% Money-Back Guarantee
  • Low $69 cost to get started, cancel or pause your membership anytime
  • See official site, terms, and details »
Better Business Bureau A+
In Business Since 1989
Monthly Cost $69
Reputation Score 9.5/10
Our Expert Review 4.5/5.0 (see review)

Sky Blue Credit Repair offers quick service by disputing up to 15 items per month, a 90-day money back guarantee, and a low starting cost.

+See More Credit Repair Services

How to Report CROA Violations

If you believe that a credit reporting organization has violated the CROA, contact the Consumer Financial Protection Bureau and submit a complaint.

Several credit repair organizations are legitimate and do a good job cleaning up mistakes on credit reports. It’s important to use an organization with high ratings and to be aware of your rights under the CROA. If a credit repair organization asks you for an upfront payment or in any other way violates the CROA, report it to the CFPB and find another credit repair service provider.

Photo credits: CreditLoan.com & ConsumerFinance.gov
About Eric Bank
Based in Chicago, Eric Bank has been writing business-related articles since 1985, and science articles since 2010. His articles have appeared in "PC Magazine" and on numerous websites. He holds a B.S. in biology and an M.B.A. from New York University. He also holds an M.S. in finance from DePaul University.
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