How to Start a Credit Repair Business

Posted 2 years ago by Max Komonov

In the U.S. economy, buying a mattress, a house, and everything in between requires having good credit. People who’ve made mistakes or experienced unfortunate financial situations are punished by this system. Credit repair is about helping people out of bad credit situations.

Starting a credit repair business is fairly simple and can be good money, if done well. A reputable firm is far more likely to get customers than a company that only wants to make a quick buck. Customers can usually tell whether or not you are sincere. Take some time to decide if you are suited to start your own credit repair business. Once you have made the decision, there are several steps to follow to ensure your services are credible and worth the cost.

Training/Certifications

A degree is not required to start a credit repair business, but you definitely should get certified. It makes your business more credible, and customers will feel more comfortable trusting you with their credit. You should be aware that any old training service probably won’t be good enough. Many credit repair software businesses offer training courses to rope you into their product. Their courses are rarely thorough enough.

Look for training and certification courses through credit repair trade associations. These associations ensure high quality standards and require members to align with industry policy. It is in the association’s best interest to provide thorough training for new or potential members. Things you should learn in a training course are:

how dispute letters work
how to read and interpret contents of credit reports
how to save money for clients
how three major bureaus work and compare
how to get a banking and merchant account

The Credit Consultants Association and other trade associations provide affordable training and membership. In return, they ask you to comply with all laws and trade policies. Their seal of approval marks you as an ethical and trustworthy credit repair professional.

Legal Hurdles

Before taking advantage of a credit repair business opportunity, there are a few legal requirements to be aware of. To avoid legal trouble, be sure to stay compliant with all applicable rules and regulations.

Credit Repair Organizations Act

The regulations detailed in the CROA must be followed at all times. This is a federal law that regulates every credit repair business in the United States. It prevents companies from making false claims or taking advantage of customers. The US Federal Trade Commission has the authority to penalize or close a credit repair company that has violated the law. You can read the full CROA document online. The basic concepts are:

Misleading a client about your services and making false guarantees is forbidden.
A contract must be provided and the client must sign, with the right to cancel within three days.
Do not charge for services in advance.
Surety Bonds

Not every state requires a surety bond but it is wise to have them anyway. The surety bond protects your customers if your efforts damage their credit instead of fixing it. Each state charges different amounts for its bonds, so be sure to do your research. They usually land between $200 and $300.

Approval for a bond isn’t difficult to get as long as you have good credit and financial history. Once the application is completed, approval should come within 24 hours. Bond applications can be found at Bonds Express.

License and Registration

Most states do not require a license to start a credit repair business. Be sure to research your state, just in case. Registration, on the other hand, is required by at least 25 of the 50 states. To register, you must file an application naming your business as a credit services organization. Your business would be registered within your state of residence. Call your state’s Department of Revenue for more information on their requirements.

Taxes

Be sure to register your business with your state and get a tax ID. You will also need to register with the Federal government for an Employer Identification Number. An EIN works as your federal tax number. It would really be unfortunate to take care of all the other legalities, only to get in trouble with the IRS.

Getting Down to Business

Once you have slogged through all of the legalities, there are a few more steps to take. Before you can start helping customers, you need to attend to a couple of business necessities.

Open a bank account

This step might seem absurdly obvious. Of course, you need a business bank account. The problem arises when you are trying to find a bank that will work with you. Not all banks are credit repair business-friendly. Some of them find the business too risky and don’t want to get involved. Do not fret, though, there are several still that will work with your business including:

Wells Fargo
Schools First Credit Union
Bank Of America
BBVA
Regions Bank
Navy Federal Credit Union
Equipment

Companies that sell credit repair software for businesses will insist that you can’t operate without it. That’s not strictly true. While not necessary, the software is helpful, though expensive. The wise course might be to generate some income before investing in software.

The items you truly need are a smartphone and a laptop with internet access, email, and a word processor. Combine that with your training and you have all you need.

There are many good credit repair software packages available if you do decide to purchase one. The software charges a monthly subscription that can range anywhere from $30-$500 dollars a month. The best credit software allows you to launch and scale your business while keeping up with competitors. Credit letters, Credit Admiral, and Dispute Suite are just a taste of the various different software available online.

Website

You don’t need a big pricey website to convert prospects to customers. All you need is a well-structured page that is pleasing to the eye and provides relevant information. WordPress is a great place to start, but is not the only platform that offers good website templates.

Be a Credit to Your Industry

Credit repair services are in high demand, and a business to fill that demand isn’t too expensive to start. You can be successful by following the law and providing high-quality services at all times. You don’t even have to face starting a business on your own. All over the internet, companies like Ecwid are available to help you get in the game.

If you are ready to start your own credit repair business, Ecwid wants to come alongside you and make the journey a little less scary. Or a lot less scary. Now you can spend less time worrying about getting started and more time being a credit to your industry.

About The Author

Max has been working in the ecommerce industry for the last six years helping brands to establish and level-up content marketing and SEO. Despite that, he has experience with entrepreneurship. He is a fiction writer in his free time.