We are all familiar with ads on TV, in newspapers and on the Internet of companies promising to clean up and fix bad and poor credit quickly for a very high fee. However, what is the magic behind credit repair agencies? The answer is simple: there is no magic. CRAs cannot do anything that consumers cannot do for themselves. Indeed, CRAs may claim to improve a consumer's poor credit rating, but in fact, CRAs do not have the authority to have negative information removed from a consumer report, unless the information is inaccurate or the law requires for such information to be removed. Consequently, if the information on a consumer's report is correct, even if it is negative, there is nothing that a credit repair agency can do.

For these reasons, CRAs are governed by the Consumer Protection Act and regulated by the Ontario Ministry of Consumer Services. The CPA offers protection to consumers, making illegal certain situations involving CRAs and consumers. For example, among other things, it is illegal for a CRA to make false or misleading claims. This means that it is illegal for a CRA to represent that they can cause a material improvement to your credit file prior to examining the actual report. Furthermore, the CPA makes it illegal to accept advanced payment for a promise to repair credit. Finally, the CPA also provides guidelines that all CRAs must follow when setting out a consumer's credit repair agreement. Thus, an agreement will not be binding unless it is made in accordance with the CPA.

By this point you may be asking yourself, if CRAs cannot do anything which I cannot do for myself, what can I do to improve my credit report? The answer to this question is also simple: work with creditors and demonstrate improved payment habits. Nonetheless, if you are in serious debt, it is advisable to contact a credit counsellor. Reputable credit counsellors can be found at the Ontario Association of Credit Counselling Services (oaccs.com).

If instead you chose a CRA to help you fix a bad credit report, keep in mind that the law allows for a consumer to rescind within one year of entering into an agreement with a CRA if violations of the CPA can be cited. The rescission will operate to cancel the agreement, all related agreements and any guarantees relating to money owed.

If you need to report a problem with a CRA, or if you feel that you have been treated unfairly by a CRA, the Ministry of Consumer Services has broad investigative powers and can conduct an inquiry to any complaint received. The Ministry can prosecute offenders for no cost, and can make restitution orders in order to compensate victims of malicious CRAs.

This column provides legal information only and is produced by the students of Community Legal Services and Pro Bono Students Canada (UWO). The information is accurate as of the date of publication. Laws change frequently so we caution readers from relying on this information if some time has passed since publication. If you need legal advice please contact a lawyer, community legal clinic or the Lawyer Referral Service at 1-900-565-4LRS. You can contact Community Legal Services to book an appointment to discuss your legal issue or mediation services. Fanshawe College students may also book an appointment to attend our outreach clinic at the college. Please call us at 519-661-3352 with any inquires or to book an appointment.