Are You Accidentally Using A Credit Repair Company? Here’s How To Find Out

“John, I had a call with a company today that I might hire to help me clean up my credit report. I asked them if they were a credit repair company and they immediately said, “No, we’re not a credit repair company because we don’t dispute items on your credit reports, you do that on your own and we just advise you how to do it.” Does that really mean they’re not a credit repair company”

The position taken by that company does NOT mean they are not a credit repair organization. No company can simply state, “we don’t do credit repair and we are not a credit repair organization.”  It’s not a self conferred title. The Credit Repair Organizations Act (CROA) defines what is a credit repair organization and if you fit their definition then you’re a credit repair organization, it’s that simple. Here’s what the law defines as a credit repair organization…

Credit repair organization. — The term ‘credit repair organization’– means any person who uses any instrumentality of interstate commerce or the mails to sell, provide, or perform (or represent that such person can or will sell, provide, or perform) any service, in return for the payment of money or other valuable consideration, for the express or implied purpose of–

(i) improving any consumer’s credit record, credit history, or credit rating; or

(ii) providing advice or assistance to any consumer with regard to any activity or service described in clause (i); and

(B) does not include–

(i) any nonprofit organization which is exempt from taxation under section 501(c) of the Internal Revenue Code of 1986;

(ii) any creditor (as defined in section 103 of the Truth in Lending Act),(5) with respect to any consumer, to the extent the creditor is assisting the consumer to restructure any debt owed by the consumer to the creditor; or

(iii) any depository institution (as that term is defined in section 3 of the Federal Deposit Insurance Act) or any Federal or State credit union (as those terms are defined in section 101 of the Federal Credit Union Act), or any affiliate or subsidiary of such a depository institution or credit union.

It’s pretty clear to me that while that company doesn’t WANT to be considered a credit repair organization that they ARE a credit repair organization because they clearly meet the definition above. They’re charging you in exchange for advice that is purported to help you improve your credit. Unless they’re non-profit or a creditor then they’re performing credit repair and would need to follow the rules in the credit repair organizations act.

So the, “no no, we don’t do credit repair” excuse isn’t going to work. Just to let you know how over-reaching CROA is, several years ago FICO and Equifax were sued for allegedly violating CROA. But wait…neither FICO nor Equifax are credit repair companies and nobody in their right mind even suggests that they are. But, because of how one of their fee based services was being positioned they met that very rigid definition in CROA. And while being a credit repair company isn’t illegal (except in GA) you have restrictions on billing and the disclosures you make to the consumer.

So, now that you know this…are you using a credit repair company that has an identity crisis?

Credit Reporting Expert, John Ulzheimer, is the President of Consumer Education at, the credit blogger for, and a Contributor for the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and, John is the only recognized credit expert who actually comes from the credit industry.  Follow him on Twitter here.

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