If you’re researching the credit repair industry before starting a credit repair business, congratulations! Most people launch a credit repair business simply because millions of Americans need help with improving their credit scores. What they don’t do is gain an understanding of what it takes to operate and grow a successful credit repair business. I’m going to give you important credit repair industry facts so you can make good decisions about setting up your business model to achieve the success you desire.

If you want to learn about the size of the consumer market for credit repair, several articles on the internet share specifics about consumer credit scores. They outline the types of tradelines typically disputed by consumers and credit repair companies.

The information contained here is regarding the credit repair industry and how to set up your business properly to compete and thrive within this industry.

Government Regulations in the Credit Repair Industry

The first and most important topic to understand is how government regulations affect how you can operate your credit repair business. If you research this topic on your own it can seem complex and difficult to understand. But I’m going to simplify it for you.

There are federal regulations and state regulations. Your state’s regulations are what you want to focus on and understand. Each state does things a little bit differently.

Credit Repair Surety Bonds

At the top of the list is whether your state requires a credit repair surety bond. If they do, do not start your business without one. Also know that if you satisfy that requirement, it is only for your state. If you want to sell credit repair services in another state, you’ll have to satisfy that state’s requirements.

Whether your state requires a surety bond or not, there are most likely other regulations that you’ll have to deal with. One such requirement could be to register your credit repair company with the State Attorney General’s Office.

What You Can Charge a Client for Credit Repair Services

You’ll learn that state and federal regulations prohibit credit repair companies from charging “upfront” fees. They do allow for a “nominal” account setup fee. So, what does this mean? It means that you can charge a client to set up their account. A nominal fee could be around $100. But you cannot charge them for the service itself.

This leaves you with 2 types of pricing models that credit repair companies typically use. The less popular model is “pay for deletion”. With this pricing model, you get paid only when you delete an account for the client. Therefore, you may not receive any payments from a client for 2 to 3 months minimum. The other, more popular pricing model in the credit repair industry is to charge a monthly fee while the client is on service with you.

See more about pricing your services below under Competition in the Credit Repair Industry

You Cannot Make Promises to a Prospective Client

This is the biggest reason why credit repair business owners are fined and shut down. You cannot make promises in advertising or verbally to clients. You also cannot state credit score goals or timeframes in which you can improve a credit score. If you understand the credit repair process outlined in the Fair Credit Reporting Act, you know that these are by definition, false promises. Don’t do it.

Instead, give reasonable expectations to a prospective client. By doing so, you’ll not only keep government regulators happy, but you’ll have happy customers as well. To do this successfully you’ll need to learn what types of items are more quickly and easily removed, and which are more difficult.

Competition in the Credit Repair Industry

The competition in the credit repair industry can be fierce if you try to directly compete with the big credit repair companies. Credit repair companies like Lexington Law, Creditrepair.com, Sky Blue Credit, and more can outspend you on the internet. Google credit repair (your city) and see the companies that are running ads at the top of the page.

The good news is that the large companies in the credit repair industry don’t try to compete outside of running ads and getting others to write blog articles about them. That means everything else is open to you from a marketing standpoint.

Market Your Credit Repair Business Locally

A good place to start is to market your credit repair business locally by getting out into your community. Meet and talk to everyone that you can. Especially people in credit-related industries like real estate, mortgage, banking, solar, and automobile.

Your Prices Have to Be Competitive

The biggest change in the credit repair business over the last 10 years is that prices being charged to consumers have dropped considerably. This is due to the enforcement of the government regulation of no “upfront fees” that we discussed above. Therefore, you must look at what the big companies are charging, what local companies are charging, and price your services accordingly.

The Next Big Shift in the Credit Repair Industry

Here are 2 concepts that you need to understand. Generally, in business, you need to offer more value than your competition. And there are many more ways to increase a consumer’s credit score than just removing negative items from their credit report.

Therefore, the next big shift in the credit repair industry is that companies will offer customers more services than just credit repair. By doing so, some credit repair companies will emerge from the 81,000 credit repair firms currently operating in the United States as the leaders.

You should think about services that you can offer that would differentiate you from all the other companies on the internet and in your local area. Credit builder loans, rent reporting services, and secured credit card programs to name just a few.

credit repair industry shift
Image by Gerd Altmann from Pixabay

Your Biggest Challenge in Starting a Credit Repair Business

Most people researching how to start a credit repair business end up doing it on their own. And they do it part-time hoping the business will grow to the point that they can leave their job and run it full time. Unfortunately for the overwhelming majority of people that attempt this, they fail. Why?

Solopreneur vs Entrepreneur

Operating a startup credit repair business with the amount of regulation, competition, and labor-intensive service delivery is a bad business model. Especially for a part-timer. The people that attempt this are labeled solopreneurs. Solopreneurs wear all the hats and try to do everything themselves.

It is far better to be an entrepreneur, of course. Entrepreneurs get help running their businesses. Instead of working “in” their business, they can work on growing their business. The problem with trying to be an entrepreneur in the credit repair industry is the low fees that can be charged to a client. There simply isn’t enough money from each client to afford to pay staff.

What’s the Best Business Model in the Credit Repair Industry?

One business model in the credit repair industry overcomes all the challenges we have discussed here and more. People can start either full-time or part-time for under $300. In addition, all the necessary components such as websites, pulling credit, drafting dispute letters, merchant services, and customer service for your clients is all provided.

Work "On" Your Business Not "In" Your Business

In this business model, your main role is to grow your business through marketing and sales. You will not be spending your time and money setting up your business. You’ll be in business immediately and can then start marketing for customers.

Further, you’ll be providing far more than just credit repair. It will make you competitive with the big credit repair companies and local companies alike immediately.

To learn more about the best business model in the credit repair industry watch this video. It will give you all the details.
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