Glossary term
CROA (Credit Repair Organizations Act)
Short answer
CROA (the Credit Repair Organizations Act) is the federal law that regulates companies that sell credit repair services. It bans charging you fees before the work is fully done, requires a written contract with specific disclosures, and gives you at least three days to cancel.
Why it matters
CROA is your scam detector. It bans credit repair companies from making false or misleading claims, telling customers to lie to bureaus, or promising to remove accurate information. No company can lawfully do that, no matter what the sales pitch says. It also means an upfront-fee demand is more than just a bad deal — it's a legal violation. Anything a credit repair company can lawfully do, like disputing inaccurate items, you can do yourself for free. CROA exists because so many companies charged people for the impossible. Violations can support lawsuits, including from state attorneys general and the FTC.
Example
A company offers to "wipe" Andre's accurate charge-off for $500 paid today. That single pitch stacks two CROA problems: an advance fee, and a promise no one can keep. Andre keeps his $500. He disputes the one item on his report that's genuinely wrong himself, and reports the company to the FTC and his state attorney general.
Terms used on this page
Guides that use this term
- Credit Repair Companies: What to KnowWhat credit repair companies can legally charge, what the Credit Repair Organizations Act requires, red flags, and free alternatives to compare first.
- Credit Repair Scams: Red Flags to KnowThe red flags of credit repair scams — advance fees, guaranteed deletions, CPN schemes — plus how to report them to the FTC, CFPB, and your state.
- What Credit Repair Can and Cannot DoA plain-English map of what credit repair can fix — errors, mixed files, identity theft, outdated items — and what no one can legally remove or guarantee.
Sources
This page is based on the following official and authoritative sources. Always check the source itself for the most current rules.
Educational information — not advice
This page provides general educational information about credit, debt, and consumer protections. It is not legal advice, financial advice, or credit repair services, and reading it does not create any professional relationship. Laws, procedures, deadlines, and dollar amounts vary by state and change over time.
For advice about your specific situation, consult a licensed attorney or qualified financial professional. See our full disclaimer.