The aftermath of the pandemic has many people re-evaluating their relationship with money and exploring entrepreneurship as a job opportunity. Starting a credit repair business is an intersection of those two explorations that stems from people wanting to help others follow the same path.
Like any type of business, it’s important to work through the nuances, regulations, and expectations when starting a credit repair service. Here are the most important considerations to keep in mind as you investigate this opportunity.
What to Offer
First, consider what services to include under the umbrella of your credit repair business. Some credit repair agencies focus solely on disputing negative items or negotiating with creditors, while others take a broader, holistic approach, incorporating financial coaching as well.
Determine which offering has the most merit, based on your background and expertise.
Experience and Education
One of the best parts of starting a credit repair service is that you don’t require any special training or education. However, you need to build trust and evidence to attract customers to your business.
Consider what courses you can take to add value to your offerings. Additionally, put together a few case studies to show clients your approach. You can include your personal experience as a starting point, but it’s also worth offering free services to a few colleagues or friends in exchange for testimonials and social proof.
Legalities and Licensing Requirements
Credit repair businesses are (thankfully) closely regulated. In addition to going through the motions of choosing a business structure and registering your enterprise, you’ll also need to meet some basic compliance rules.
The Credit Repair Organizations Act (CROA) is strict about how you present your business (i.e., you can’t mislead your clients). They also require written contracts with cancelation clauses and forbids credit repair businesses from charging for services upfront. You may also be required to obtain a surety bond and register your business as a credit repair service, depending on your state. So, is credit repair a good business to start? Yes, but it’s worth reading the full CROA documentation before starting your business and seeking legal counsel for contract creation.
Software and Tools Needed
Your time is money when starting a business, and the credit repair process is time-consuming and tedious. Trying to navigate this process without software and other business tools would be a grave mistake.
Choose credit repair software that helps automate dispute letters, tracks client and project progress, and ultimately streamlines your business processes. You should also identify what other tools would help support your business— social media scheduling, email marketing, invoicing, etc.
Billing and Invoicing
As mentioned above, you can’t charge clients upfront for work. This is concerning for many business owners working with people who have a poor financial track record. Consider having an initial consultation included in your contract as the first billable work before proceeding with disputes.
Most credit repair services run on a monthly retainer or billing cycle. You’ll need an invoicing strategy and tools to charge repeat payments while remaining compliant.
Marketing and Client Management
Finally, you’ll need to determine who your ideal customer is and how you’ll connect with them. Marketing and client management are nuanced and time-consuming. You’ll require a marketing strategy and, more importantly, the time and effort to execute it.
Consider whether you’ll handle this aspect of your business yourself or if you’ll outsource to a virtual assistant or specialist to help handle the workload.
What a Credit Repair Business Is and Isn’t
A credit repair business is a service that helps improve credit scores using legal methods to dispute and remove negative items from credit reports. It’s important to understand that not all efforts will be rewarded, and you can’t turn someone’s poor financial history into a success story. You can, however, help make a difference as they work to get back on track.
Additionally, this isn’t a business for someone looking to become a millionaire overnight. However, with time and dedication, you can create a profitable business and reliable source of income.