Is Credit Repair Legal?

Spotting Unethical Credit Repair Practices

Many credit repair businesses offer credit repair through unethical tactics. But actual credit repair is NOT illegal. In fact, it is a much-needed service to most people, and legal, but there are certain rules that they need to follow. The Credit Repair Organizations Act, or CROA, is a federal law. It protects consumers from unfair and deceptive practices by credit repair organizations.

There are various ways to detect an illegal credit repair business. Here are a few:

  • Charging in advance for credit repair services – Under CROA, credit repair organizations may not require payment until they have rendered services. They may only collect payment after the promised services have been performed.
  • Failing to provide a written contract – Credit repair organizations are required to provide a written contract before services can be rendered. The contract must include specific terms, such as payment conditions, service descriptions, and a statement allowing consumers to cancel without penalties within three business days.
  • Suggesting creating a new or altered identity to reset your credit is illegal. For instance, obtaining a new social security number or other identifiers to conceal past negative history is prohibited.

  • Making guarantees about things outside of its control – Credit repair businesses may not make any untrue or misleading representations about their services. When a company makes a promise or guarantee about something out of its control, it has made a misleading representation. For instance, a credit repair business cannot guarantee the removal of negative items. The credit bureaus, not credit repair organizations, control such removals.

An organization that violates the CROA is unethical and should not be trusted with your credit repair needs. If you want to learn more, check out our blog.


Credit repair is a legitimate and legal vital service, but it must be conducted within the bounds of the law. The Credit Repair Organizations Act (CROA) safeguards consumers from unfair practices. Recognizing illegal credit repair businesses is crucial, and some signs include upfront charges, absence of a written contract, promoting identity alteration, and making guarantees beyond their control. Trustworthy credit repair adheres to the CROA, ensuring your financial well-being.

For more ScoreCEO how-to guides, tips, and tricks visit ScoreCEO’s How-To page.

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