What Is The Credit Report Organizations Act?
Signed into law in 1996 by President Clinton, the Credit Repair Organizations Act, also known as CROA, is actually part of the Consumer Credit Protection Act. It requires credit repair companies to advertise and communicate with consumers in a transparent and honest manner.
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For many people, one of the most frustrating situations they can encounter is having bad credit. Obtaining a loan for a car or getting approved for a mortgage can become an act of futility. As a result, many consumers turn to credit repair companies to help them restore their credit. Unfortunately, many companies have taken advantage of consumers by requiring high upfront fees and then doing little or nothing to help them.
Prior to this act, companies would tell their clients they could remove negative items from credit reports. Companies would make false promises while charging hundreds or thousands of dollars for their services. When the Credit Repair Organizations Act was passed, it then became illegal for these companies to promise their customers they could give them a fresh start. It also forced companies to eliminate the practice of obtaining large upfront fees for their services.
One important aspect of the CROA has been requiring companies to let their customers know they can handle the credit repair process on their own. The decision to use or not use a credit repair company depends on many factors for each customer. It really comes down to how confident they are in their ability to handle the process. It also requires a lot of patience to see it through to the end. Therefore, anyone whose credit is in need of repair needs to take these possibilities into consideration.
Consumers have reaped many benefits since this law was passed. Credit repair companies can no longer operate with high upfront costs, and hidden fees. For those who decide to use a credit repair company, they are protected much more today than in years past.