It's a Great Business But...
The changes in the American economy over the last 2 decades have created a huge market of consumers in need of help with their credit reports and increasing their credit scores. As a result, many people have decided to look into starting a credit repair business.
But just like any other business, there are challenges. If you have never attempted starting a credit repair business before there is a lot of information to gather and the knowledge necessary to do it the right way. The credit repair industry, like many others, has a high percentage of people that start the business and quit within the first year. Why is that? And how do you avoid being one of those people? This article will cover the points you need to consider.
Laws and Licensing
There are no licenses you need to have to be in the credit repair business. However, you do have a few laws you must consider. And, these laws may be different in each state. The Credit Restoration Organizations Act (CROA), a federal law, states that a for-profit company cannot charge fees before performing credit repair work for a consumer. Although many have come up with creative ways to deal with this law it will affect the cash flow of a new business owner. However, attorneys, banks, credit unions, and 501(c)3 non-profit companies may charge upfront fees. They are exempt from CROA.
In addition, certain states require surety bonds up to $100,000. Bonds will run you between a few hundred and a few thousand dollars every 2 years depending on the surety amount and your credit score. Yes, credit score affects just about everything.
Fees for Service
In addition to deciding how you are going to charge for your credit repair services, (if you cannot charge upfront how are you going to charge?), you must also decide how much to charge. Gone are the days when you can charge $1,500 to $5,000 for credit repair services. There are established, reputable companies that charge $90 to $125/month for a very effective service. You’ll have to compete with that when starting a credit repair business.
Initial Investment in Starting a Credit Repair Business
There are typically two ways to go with starting a credit repair business. The first is to purchase all the necessary components such as credit repair software, a website, legal documents, credit repair training, etc. separately. We’ve estimated this cost to be about $10,000 in the first year although these items can be purchased on a monthly basis. The other way to go is to purchase a franchise. The investment in a credit repair franchise is between $19,000 and $25,000. Don’t be discouraged if you do not have $10,000. We will give you a third alternative below that has a start-up cost of less than $300.00.
Consumers today expect that a company will have technology in place to allow them to stay in touch and keep track of what’s happening with the progress of their credit repair process. You must provide your customers with the ability to check the status of their accounts online to be competitive in this industry. Doing this as a solopreneur may be an expensive and daunting task.
If you're doing it alone in this business you have to be good at three things, marketing, sales, and administration. You have to be a good marketer. Selling your credit repair service to friends and family may get you started but you must position yourself as a credit repair expert in your area. You have to get the word out in the community by developing relations with other business professionals that may have clients that need your service. You must have an online presence as well. Not just a website but the ability to drive traffic to your website. You need to have leads coming to you every day.
Then you have to be great at sales especially when you’re new because you have no track record or credibility to fall back on. You have to sell against local and national companies that your prospective customer is going to contact as well. Even if your company has the same credentials and advantages as other companies how good are you at selling and closing sales?
Lastly, you have to be good at credit repair. Can you pull credit reports (credit report brokers don't want to supply credit repair companies) and analyze those reports. Do you know how to advise the client as to the probability of removing all types of items (foreclosures, liens, charge-offs, medical bills, repossessions, late payments, and more)? You then have to know the correct dispute codes and reasons that a credit bureau will open a dispute about these items. Then you have to track this information and be prepared to challenge each item multiple times for a client. This is no easy set of tasks.
You have to have time to do all that is stated above when starting a credit repair business. Credit repair business owners can't find time to develop new customers because they are doing credit repair work for their existing customers. Or, they can’t find the time to service the customer because they are trying to develop new customers.
Everything stated above comes from experience. It seems daunting, and if done on your own it is. However, we have developed a system for new credit repair business owners that addresses and overcomes everything we have discussed here.
All the state laws and requirements are met. You can do business in ALL 50 states right away.
There is a low initial investment of less than $300.00.
This system provides the latest technology for you to offer customers.
There are an online credit repair business training platform and one-on-one credit repair business coaching.
You utilize staff to do the credit repair admin work. You do not need to purchase credit repair business software. This allows you the time to market and make sales to customers.
In addition, you'll provide the best, fastest, and most effective credit repair service in the industry.
But the best component of this solution is that you can develop other people that want to build a credit repair business. They are part of your business and you earn income from their production.
It is without question the best opportunity for anyone that desires to start a credit repair business.
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This post was originally published in March of 2014 and has been updated for freshness, accuracy, and comprehensiveness in April of 2022.