Federal law limits how credit repair companies can charge you, what they can promise and what they must put in writing. Here is what to do, step by step, when a company crosses those lines.
Quick summary
- Federal law bars credit repair companies from taking any payment until the work they promised is finished, and every agreement must be in writing.
- No company can lawfully remove accurate negative information from your report or guarantee a specific score increase; the CFPB flags both promises as scam warning signs.
- If a company broke the law, put your complaint in writing, cancel the contract, ask for a refund of upfront payments and report it to the FTC, the CFPB and your state.
- The CFPB forwards complaints straight to the company and accepts supporting documents up to 50 pages, and it usually allows just one complaint per problem.
- Every lawful step a credit repair company takes is one you can take yourself for little or nothing, starting with your free reports from the three major bureaus.
Paying a credit repair company and getting little or nothing in return is a frustrating spot to be in. Federal law gives you firmer footing than you might expect. The Credit Repair Organizations Act restricts how these companies can bill you, what they can claim and what they must put in writing. This walkthrough covers the steps in order: documenting what happened, canceling, asking for a refund and reporting the company.
What Credit Repair Companies Legally Cannot Do
The Credit Repair Organizations Act, one part of the broader Consumer Credit Protection Act (the same federal law that contains the Fair Credit Reporting Act), governs companies that sell credit repair services. It bans false or misleading claims about what a service can achieve, spells out disclosures a company must make, insists that agreements be put in writing, forbids demands for advance payment and lets consumers cancel the contract in defined situations. The Consumer Financial Protection Bureau is blunter about the payment rule: until the promised services are actually completed, no version of advance billing is allowed, and monthly payment plans built to dodge the requirement are illegal too.
A company that billed you before doing the work did not bend the rules. It broke them.
The law also draws a hard line on results. No credit repair organization can lawfully strip accurate negative information from your credit report, and a company that pushes you to dispute entries you know are correct is waving a flag, not offering a service.
A second layer applies when the company sold to you over the phone. Under the federal Telemarketing Sales Rule, a credit repair service that sells by phone has to clear two hurdles before billing you. It cannot ask for money until the date it told you it would deliver the services, and it has to provide a consumer report showing the results, one generated more than six months after it claimed those results happened. Once both conditions are met, it can accept your payment.
Warning Signs You Were Misled
The CFPB lists warning signs that recur in complaints about credit repair companies. A few of the most common, alongside the rule each one breaks or bends:
| What the company did | Why it matters |
|---|---|
| Demanded payment before performing services | Illegal under the Credit Repair Organizations Act in every form |
| Guaranteed a specific score increase | The CFPB flags this promise as a scam warning sign |
| Promised to remove accurate negative information | No one can do this lawfully |
| Told you to dispute entries you believe are accurate | The CFPB lists this practice as a scam warning sign |
| Avoided explaining your rights | Disputing errors yourself is free under the Fair Credit Reporting Act |
Enforcement actions show how these patterns play out. In an FTC matter, the operators of BoostMyScore.net charged fees of $325 to $4,000 to place customers as authorized users on other people’s credit accounts, while promising score increases of 100 to 120 points within two to six weeks. The FTC said those results could not be guaranteed or reliably delivered, and the proposed settlement bars the defendants from selling that kind of fake credit access or collecting advance fees. In a larger case, the FTC alleged that a network operating as Credit Glory took in close to $200 million through illegal upfront and recurring billing, made false promises about deleting negative items and posed as debt collection companies and creditors. In a separate matter, the CFPB alleged that Lexington Law and CreditRepair.com collected advance fees unlawfully and used advertising it described as deceptive bait-and-switch.
Step One: Put Your Complaint in Writing to the Company
Before anything else, get your own record straight. Gather what you have: the contract, if you ever received one, receipts or card statements showing what you paid, emails and text messages, and notes from phone calls with dates and names.
Then write to the company. State what you paid, what the company promised, what it actually delivered and what you want, which will usually be cancellation of the contract plus a refund. Keep the letter short and factual, send it in a way that leaves a record, such as email or certified mail, and keep a copy.
Written contact does two things. It builds a paper trail you can hand to a regulator later, and it sometimes resolves the matter on its own once a company sees that a consumer is documenting everything. Give the company a reasonable deadline to respond, so that silence, if it comes, becomes part of the record too.
Step Two: Cancel and Request a Refund Under CROA
The written contract rule matters here. The law says credit repair agreements must be put in writing, and it gives you the option to cancel in certain circumstances. If the company never handed you a written contract, say so plainly in your letter. That omission is itself a problem under the law, and it makes your own account of the agreement more important, not less.
If you were charged before the promised services were finished, ask for those payments back. Advance billing of that kind is illegal, so a refund request is not a favor you are asking for. It is the return of money the company should never have collected.
If the company sold to you by phone and never produced the consumer report the Telemarketing Sales Rule requires, include that in your letter as well. The CFPB notes that when one of these companies breaks the law, you may be able to sue. A consumer law attorney can review your contract and tell you whether that applies to your situation.
Step Three: Report the Company to the FTC, the CFPB and Your State
Reporting a company does not start a personal lawsuit, but it puts the conduct in front of the agencies that enforce these laws, and enforcement can lead to refunds for consumers. After its case against Lexington Law and CreditRepair.com, for example, the CFPB arranged for a legal administrator to handle payments to victims.
The FTC asks consumers to report suspicious claims and problems with credit repair companies through its website. The CFPB accepts complaints about credit repair services and sends them directly to the company, which is asked to respond. When you file, focus on the key dates, dollar amounts and exchanges with the company, written in your own words, and attach documents that back them up, such as account statements and messages, up to 50 pages. You usually get one complaint per problem, so include everything the first time.
Report to your state attorney general or state consumer protection agency as well. Rules and remedies vary by state, and those offices can tell you what applies where you live.
If You Paid by Card or Signed a Contract You Never Saw
Paying by card or through a payment plan opens another avenue. If you believe a charge was improper, contact your card issuer and ask about its dispute process. Issuers set their own procedures and timelines, so ask what documentation they need and put your dispute in writing where you can. Even if the issuer does not reverse the charge, your dispute becomes part of the record.
A missing or unseen contract deserves its own attention. The law requires these agreements to be written, and a company that skips that step is telling you something about how it operates. If you clicked through an agreement you never actually read, or were told the contract would come later, describe that exactly when you complain. Regulators cannot know what you were told unless you write it down.
What You Can Do for Your Credit While the Refund Plays Out
Red flag: A company that tells you not to contact the credit bureaus directly is not protecting your interests. You have a legal right, at no cost, to dispute errors on your reports under the Fair Credit Reporting Act.
Every lawful service a credit repair company sells is something you can handle on your own for little or no money. Start by reading your reports. You can get free copies from each of the three major credit bureaus, Equifax, Experian and TransUnion, once every 12 months, and the bureaus have permanently extended a program that lets you check each report weekly for free.
If you find mistakes, write to both the credit bureau and the furnisher (the company that reported the information) and ask each one to correct its records. Include copies of anything that supports your case, such as payment records or court papers. The bureau is required to look into the dispute and update its records within 30 days.
Not every item needs a dispute. Accurate negative information, including collections, ages off on its own schedule, and paying some old debts may not change your score the way you would expect. Our guide to what paying a collection actually does to your score explains that trade-off.
Where to Get Legitimate Help
Credit counseling organizations are usually nonprofits, and their counselors are trained in consumer credit, money and debt management and budgeting. A reputable organization will share free information about its services before asking you anything about your own finances. If a service will not do that, the CFPB says to treat it as a red flag and look elsewhere.
Counselors can help you get copies of your credit reports and scores, work out a budget and, when debt is the core problem, set up a debt management plan. Under such a plan, you send one payment to the counseling organization each month, and it distributes the money to your creditors; monthly payments, interest charges and fees typically come down as a result. Our guide to how nonprofit credit counseling works covers what to expect.
You can find counselors through the Financial Counseling Association of America, the National Foundation for Credit Counseling or the approved counselor list maintained by the U.S. Department of Justice, then confirm an organization’s standing with your state attorney general and state consumer protection agency.
Related guides
- Mistakes to Avoid When Hiring a Credit Repair Company: the warning signs to check before you sign anything or pay anyone.
- A First-Timer’s Guide to DIY Credit Repair: how to dispute errors yourself, the work you would otherwise be paying a company to do.
- Does Paying a Collection Improve My Credit Score?: what settling an old debt changes on your report, and what it does not.
Reader questions
Q: Can a credit repair company charge me before it does any work?
A: No. The Credit Repair Organizations Act stops companies from seeking or collecting payment until the promised services are complete. Monthly payment plans built to sidestep that rule are illegal too.
Q: Do I have a right to sue a credit repair company that broke the law?
A: The CFPB notes that a violation can give you grounds to sue a credit repair organization. A consumer law attorney can review your contract and explain how that applies to your situation.
Q: What should I include in a complaint to the CFPB?
A: Focus on the key dates, amounts and exchanges with the company, in your own words, and attach supporting documents, up to 50 pages. The CFPB usually allows only one complaint per problem, so include everything the first time.
Q: What if the company never gave me a written contract?
A: The law requires credit repair agreements to be in writing, so a missing contract is a violation worth reporting. Describe exactly what you were told and signed in your refund request and complaints.
This article is general information, not financial or legal advice. Scoring models, lender policies and laws change, and state rules vary. Check official sources such as the Consumer Financial Protection Bureau and the Federal Trade Commission, and consider a nonprofit credit counselor for help with your own situation.