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Credit Repair Organizations Act (CROA)

With credit reporting and scoring having such a huge influence in the marketplace, consumers are becoming more preoccupied with the health of their credit. Many are turning to the credit repair process to improve their status. There is a fundamental need for credit repair as over 75% of all credit reports contain inaccurate or outdated information of one kind or another. Such mistakes can drastically affect credit scores. Some consumers will choose to challenge these items on their own, while many others will employ the services of a credit repair company, like Legacy Legal, to handle the task.

"Unfortunately, as the demand for credit repair rises, the opportunity for scams becomes more prevalent," says Florida's assistant attorney general Marta Moakley. Marta continues, "As our economy becomes sluggish and debt levels rise, more people turn to companies that specialize in credit repair for help. Consumers need to be aware that there is a potential for fraud."

Credit protection and credit repair scams are one of the top consumer complaints reported to the FTC. However, complaints against the credit bureaus are also at the top of the list. Due to the number of complaints against the bureaus, the government enacted the Fair Credit Reporting Act (FCRA) which regulates the bureaus, those who supply information to the bureaus, and their reporting practices. Due to complaints against credit repair companies, additional legislation was enacted called the Credit Repair Organizations Act (CROA). The CROA regulates the practices of credit repair companies. Both laws protect you, the consumer.

If you choose to use a credit repair company, there are things you can do to make sure your information is safe and your hard-earned money is going towards legitimately improving your credit.

You should receive a contract from the company that contains the following information:

  • The payment terms for services, including their total cost.
  • A detailed description of the services to be performed.
  • How long it will take to achieve the results.
  • Any guarantees they offer.
  • The company's name and business address.

If any of this information is missing, do not sign the contract. Legacy's contract contains all of the above information. We are upfront and honest regarding our services and fees and how long it will actually take. There are many companies who assess hidden fees and who are misleading about their services.

The company must also disclose and honor a "cooling-off" period. This is a three-day waiting period from the time you signed the contract until any services can be performed. You can cancel your contract during the cooling-off period without any fees assessed.

Another issue to be aware of is if the company requests a one-time service fee upfront, do not go with them. It is against the CROA for any credit repair company to charge for services before they are completed.

Legacy honors the cooling-off period and only charges for services once they have been completed. Rest assured, Legacy upholds all guidelines stated in the CROA and the FCRA, it is in our, and our clients', best interest to do so.

To learn more about the FCRA and FDCPA go to http://www.ftc.gov/os/statutes/croa/croa.htm