Credit Repair Organizations Act (CROA)

Credit repair organizations often take unfair advantage of those with limited economic means or who are otherwise vulnerable, such as the elderly or uneducated, which all too often results in financial hardship for consumers. Consequently, credit repair organizations must abide by specific disclosure requirements under federal law as well as Minnesota law upon entering into contracts for services with consumers.

Any consumer can, generally speaking, clean up their own credit score in the same manner that a credit repair company can. But, most consumers decide to proceed using a credit repair organization to help them. In doing so, consumers must be careful to ensure the company they hire is complying with the law and that they are not being taken advantage of.

CROA prohibits the following:

      • It is illegal to charge payment in advance of services. This is an important provision for consumers to note. Payment can only be made after the promised service is fully performed.
      • It is illegal to make any false or misleading statements or representations or to advise consumers to make false statements or representations to credit agencies or credit provider.
      • Consumers must be given a separate written statement containing a disclosure with required statutory language warning of the limitations of both the consumer and the credit repair company in repairing credit scores and history.
      • Waivers under the Act are generally invalid.

In addition, improper credit repair tactics can include:

      • Removing correct but damaging information from your credit file.
      • Filing segregation, such as creating a new identity to hide unfavorable credit history items.
      • Applying for an Employer Identification Number from the IRS to use it for applying for new lines of credit. This is a federal crime constituting fraud on the government .

Teske Micko represents consumers on a class-wide basis who have been victimized by credit repair organizations. If you feel that your rights have been violated by a credit repair organization, or you have questions about your rights under Minnesota’s credit repair organizations act, please contact us to discuss your situation.

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