Credit Repair Company Rules: No Upfront Fees, Written Contract, 3 Days to Cancel

Published by the Modern Lending Solutions editorial team. Last reviewed: October 30, 2026.

Short answer: under the federal Credit Repair Organizations Act, a credit repair company may not take your money before it has fully done the work it agreed to do, may not make untrue or misleading claims, must give you a written statement of your rights before you sign, must use a written contract, and must let you cancel within three business days. No one can have accurate, current information removed from your credit report, and you can dispute errors yourself for free. This is general information, not legal or financial advice.

Who the law covers

The Act defines a credit repair organization as anyone who sells or performs a service, for money, “for the express or implied purpose of” “improving any consumer’s credit record, credit history, or credit rating”, or of giving advice or help about that (15 U.S.C. 1679a(3)(A), official U.S. Code text, 2024 edition on GovInfo, read October 30, 2026). The definition leaves out tax-exempt 501(c)(3) nonprofits, a creditor helping you restructure a debt you owe that creditor, and banks and credit unions and their affiliates (1679a(3)(B)). Ask any company whether it says the Act applies to it.

No payment before the work is done

The law says: “No credit repair organization may charge or receive any money or other valuable consideration for the performance of any service which the credit repair organization has agreed to perform for any consumer before such service is fully performed” (15 U.S.C. 1679b(b), official U.S. Code text). The CFPB says: “A simple rule to follow is ‘Don’t pay upfront.’” It adds: “Some companies will structure monthly payment plans to try to avoid this requirement. You should know that all forms of upfront payment before services are completed are illegal” (CFPB, page last modified November 7, 2023, read October 30, 2026; an older page, so check for updates).

If the company sells to you by phone, the Telemarketing Sales Rule may also apply, as the CFPB notes. That rule bars asking for or taking a fee for services said to remove negative information from, or improve, your credit until the time frame the seller promised has passed and the seller has given you a consumer report showing the promised results, “such report having been issued more than six months after the results were achieved” (16 CFR 310.4(a)(2), eCFR, text up to date as of October 28, 2026, read October 30, 2026).

No untrue claims

The Act says no person may make, or advise you to make, a statement that is “untrue or misleading” about your creditworthiness to a credit reporting company, a creditor, or a lender you are applying to (1679b(a)(1)). No person may advise you to alter your identification to hide accurate, not obsolete, negative information (1679b(a)(2)), make an untrue or misleading claim about its services (1679b(a)(3)), or commit fraud or deception in selling them (1679b(a)(4)).

Warning signs the CFPB lists (CFPB):

It wants you to pay before it provides any services.
It promises to get rid of negative information even if that information is accurate and current. The CFPB says: “No one can do this.”
It tells you to dispute all the information in your credit report, even if it is correct and timely.
It does not explain your rights and what you can do for yourself for free.
It tells you not to contact the nationwide credit reporting companies directly.
It claims it can guarantee a specific increase in your credit score.

For scams that ask for money before a loan, see advance-fee loan scams.

The written statement of your rights

Before you sign any contract, the company must give you a written statement whose wording is set in the law (15 U.S.C. 1679c(a), official U.S. Code text). It must be a document separate from the contract (1679c(b)). Among other things it says: “neither you nor any ‘credit repair’ company or credit repair organization has the right to have accurate, current, and verifiable information removed from your credit report”, and “You have the right to cancel your contract with any credit repair organization for any reason within 3 business days from the date you signed it.” The company must keep a copy you signed for 2 years (1679c(c)).

The statement’s wording dates from the 1996 law, so its lines about fees for credit reports may not match today’s rules. For how to get your reports now, see check your credit report before a loan.

The written contract

No services may be provided unless you have signed a written and dated contract, and not “before the end of the 3-business-day period beginning on the date the contract is signed” (15 U.S.C. 1679d(a), official U.S. Code text). The contract must include, in writing (1679d(b)):

The terms of payment, “including the total amount of all payments to be made by the consumer”.
A full and detailed description of the services, all guarantees of performance, and an estimate of the date the services will be complete or how long they will take.
The company’s name and principal business address.
A bold statement next to your signature line that you may cancel without penalty before midnight of the 3rd business day after you signed.

A contract that does not comply with the Act “shall be treated as void”, and any waiver of your rights under the Act is void too (15 U.S.C. 1679f, official U.S. Code text).

Three business days to cancel

You may cancel any contract with a credit repair organization “without penalty or obligation” by notifying the company “at any time before midnight of the 3rd business day which begins after the date” the contract is signed (15 U.S.C. 1679e(a), official U.S. Code text). The contract must come with a “Notice of Cancellation” form, in duplicate, that names the company, its address and the cancellation date (1679e(b)). You must be given a copy of the completed contract, the rights statement and any other document you sign, at the time you sign it (1679e(c)).

A date example, only for the math: the sections cited here do not define a business day, so this example counts Monday to Friday only. If you sign on Monday, November 2, 2026, the business days that begin after that are Tuesday, November 3, 2026, Wednesday, November 4, 2026 and Thursday, November 5, 2026, so you would cancel before midnight on Thursday, November 5, 2026. Use the date written on your own cancellation form, and send your notice in a way you can prove, such as a signed and dated letter you keep a copy of.

You can dispute errors yourself, for free

The CFPB says: “Disputing errors in your credit reports is a free legal right available to you under the Fair Credit Reporting Act. You don’t need to pay a credit repair organization to do it for you” (CFPB). It also says you “generally cannot have negative information removed from your credit report if it is accurate” (CFPB). For the steps, see how to dispute a loan reporting error; for how long negative items stay, see paying off collections before a loan.

If a company breaks the rules

A company that does not comply is liable for the greater of your actual damages or “any amount paid by the person to the credit repair organization”, plus punitive damages the court may allow and, in a successful case, costs and reasonable attorneys’ fees (15 U.S.C. 1679g(a), official U.S. Code text). The CFPB says you can submit a complaint with the CFPB if you are having trouble with credit reports and scores (CFPB). For your options, ask a lawyer or a legal aid office where you live.

Questions to ask before you sign

Will you give me the written statement of my rights before I sign?
What is the total of all payments, and when is each one due? Do you charge anything before the work is fully done?
Which services will you perform, by what date, and what do you guarantee in writing?
Will you tell me to dispute anything that is accurate? (If yes, that is a warning sign.)
Where is the Notice of Cancellation form, and what date is on it?
Is this sale made by phone, and do you follow the Telemarketing Sales Rule?

Checklist

Get your credit reports and mark anything that is wrong.
Dispute errors yourself first; it is free.
Do not pay before the work is fully done.
Get the rights statement and a written, dated contract before any work starts.
Keep copies of everything you sign.
Cancel in writing within three business days if you change your mind.

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Sources

Disclosure: Modern Lending Solutions is not a lender, loan broker or agent for any lender or loan broker, and does not make credit decisions. Any compensation we receive is paid by participating lenders, only for advertising services. This guide is general information, not financial or legal advice.

What the Law Says a Credit Repair Company Must Do