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Credit Repair Laws: How to Operate a Credit Repair Business in Your State

When starting a credit repair business, it is important to understand and comply with the laws that govern the credit repair industry in the United States, as well as in your particular state.

Starting a credit repair business is simple, but you risk losing it all if you don’t follow the rules and regulations. We can’t offer you legal advice, so we’ve simply gathered all the information that is readily available on federal and state laws and compiled them for you here. To learn the basics of starting a credit repair business, read on.

or use the map below

Federal Credit Repair Laws

The Credit Repair Organizations Act (CROA) is a federal law that regulates credit repair organizations in the United States. One of the most important things the CROA did is make it illegal for credit repair organizations to make false claims. Don't worry, it is simple to stay compliant once you get familiar with the law.

State Credit Repair Laws

Some states have state laws regulating credit repair organizations in addition to the federal laws. Many states prohibit any payment by the client prior to the credit repair organization rendering services. Some state laws define terms and reiterate business and financial industry laws as they relate to the credit repair organizations operating within their state. You should become familiar with the state laws for each state within which your credit repair organization operates.

Read on to explore how credit repair laws and regulations may affect your new business.

Federal Laws Governing Credit Repair

The Credit Repair Organizations Act (CROA) is a federal law passed in September 1996 that regulates organizations whose purpose is increasing consumer’s credit score through credit repair. This law is moderated and enforced by the Federal Trade Commission (FTC), so the FTC has the authority to close down any credit repair organizations that are operating outside the parameters of these laws (like fraudulent or illegal activities).

The main sections include mandates that:

  • You can’t misrepresent your services (no false claims about what you will do for the client and definitely no promise of working and then not doing the work).
  • You must provide a written contract between you and the client that the client signs.
    Your clients have three days to cancel the contract.
  • You can’t charge until services are rendered (most companies will do some initial document processing and then charge the client for the work they have just done).
  • Consumers can sue and get refunded all money paid (plus legal fees and damages) if the credit repair organization is found to have violated the CROA with that consumer.
  • State laws can’t change or render any of the CROA ineffective.

Simply put, these laws were put in place to protect people from credit repair companies using scammy business practices. As long as you’re not trying to be sketchy and scam people, you should be able to stay compliant easily!

To read the Credit Repair Organizations Act in full, visit the United States House of Representatives’ record of the act here.

Many credit repair organizations have new clients "sign up" on their site, in person or over Zoom, as sales specifically conducted over the telephone must follow State and Federal telemarketing laws. For more information on the Federal Telemarketing Sales Rule (The "TSR") visit

Legal disclaimer: The information contained on this site and our guides are for educational and informational purposes only. It does not constitute legal advice, nor does it substitute for legal advice. Persons seeking legal advice should consult with legal counsel familiar with their particular situation as consumer credit laws vary by state.

What is a surety bond?

A surety bond is a three-party agreement that legally binds your credit repair company (who needs the bond), the state (who requires the bond) and a surety company that sells the bond. If you fail to perform or cause consumers harm, the bond will cover resulting damages or losses. Choose the state you are considering doing business in and find out if a bond is required.


We are not aware of any “state” license requirements specifically for credit repair; however depending on your city and county you may be required to obtain a local tax receipt, permit or local professional license. Click on the state you are considering doing business in and if any of our research shows that state requires a license, it will be shown for that state. 

The Credit Hero Challenge offers training, resources, and credit repair certification.

Market Potential


Market Temperature:

0 1 2 3 4 5 6 7 8 9 10
# of americans with bad credit

10 million

Average americans’ debt in Collections


Average debt on credit report


Percent of population with credit scores below 700


Percent of home buyers getting a mortgage for their home purchase


Legal disclaimer: Our software products and resources offer credit information, not legal advice. We make every effort to ensure the accuracy of the information and to clearly explain your options. However, we do not provide legal advice (i.e.; the application of the law to your individual circumstances). For legal advice, please consult an attorney, your city or your state.

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