How To Start A Credit Repair Business

Credit Repair Business Overview :

In today's troubled economy, many people are struggling with credit problems. As a credit repair business owner, you are the connection between debtors and creditors.

A normal day may start with new client meetings. Afterwards you may help other clients by working out a budget and organizing debts.

Finally, you may spend time talking and negotiating with creditors to reduce interest rates or consolidate debts.

Credit Repair Business Recommendations

There are a few things to consider before you start your business. First, decide whether to have an office or work from home. It is cheaper to start from home but an office gives more credibility.

Be advised that non-law firm based credit repair businesses are often required to place a surety bond before they can work.

Finally, consider starting a credit repair franchise such as Credit CRM. There are some up front fees to start a franchise but it also gives you name recognition, as well as a proven business model.

Tasks, Skills, and Issues, Needed:

Whether you do all the work yourself, hire, or subcontract, here's a list of tasks, skills, and issues that need attention:

Marketing, advertising, networking, sales
People Skills: Employees, Customers, etc.
Staying current with business matters such as licenses, insurance, and permits
Website maintenance and marketing
Money management
Bookkeeping
Basic math skills
Problem solving skills
Basic computer skills
Recording and organizing client's financial records
Analyze credit scores and history from credit reporting agencies
Scheduling appointments
Acquire credit repair leads from banks and credit card companies
Be aware of the credit reporting laws
Take action on fixing any credit report errors. If the reporting agency cannot verify a disputed item on a credit report, they must delete it.
Contact creditors as needed to settle disputes or make payment arrangements
Determine if there are too many open trade lines that are causing credit score problems
Make sure paid-off loans show on credit reports
Scan or make copies of all financial information and file per client
Uphold non-disclosure agreements and guidelines
Acquire credit repair leads from banks and credit card companies

Approximate Daily Hours Needed:

General Hours of Operation: When your business is open - 9 a.m. to 5 p.m., although you may find evening and weekend hours easier for individuals and business owners.

Hours Needed to Prepare: You will spend about an hour before and after business hours filing paperwork and organizing for the next day.

Employees Needed To Run This Business:

During the start up phase, you can run this business single-handedly. Once your business is up and running successfully, you may need to hire the following:

Credit counselor

Paralegal

Scanning and filing of documentation

Customer service

Bookkeeper

Receptionist

Licenses:

In addition, to a Business License, you will need a Federal Employee Identification Number (EIN), insurance and possibly incorporation paperwork such as an LLC.

A credit repair organization (a.k.a. credit services organization) may be required to obtain a surety bond. If a bond is required, a copy must be filed with the Corporate Commission in your state.
You will also have to follow the regulation of the Credit Repair Organization Act closely.

Approximate Minimum Start up Cost:

The average startup cost is approximately $500 in order to get supplies, licensing, and certifications.

Necessary Equipment to Run this Business:

Necessary Start-Up Equipment & Supplies:

Regular Office Equipment

Standard Office Supplies

Computer with Internet access

Cell phone

Software to create necessary forms and letters

Business cards

Scanner

Fax machine or software

File storage

Paper shredder

Website

Filing cabinet

External hard drive(s)

Monthly Expenses To Consider:

Office space/rent
Answering and/or cell phone service
Wages
Fax service
Postage
Internet access
Certifications
Advertising/Marketing
Utilities

Special Requirements For This Business:

Special certifications
Surety bond
Liability insurance
Consumer law knowledge
Business law knowledge

Pros And Cons:

The Pros of Running a Credit Repair Business:

Low cost startup

The benefit of working from home and being your own boss

The amazing feeling you get from helping others overcome financial woes

Ability to gain knowledge and experience to apply in related fields

The Cons of Running a Credit Repair Business:

Large amount of paperwork involved

Law prohibits you from charging customers before work is done

People are leery of credit repair firms due to the high rate of fraud

Highly competitive

Type of Customers You Need to Attract:

Market yourself to banks and credit companies to earn referrals. The target market of the is widely distributed among private individuals and business owners.
The most common target market includes middle class suburban families who are attempting to purchase a home.
Business owners need assistance most often with obtaining small business loans.

Credit Repair Business Statistics:

According to creditrepairfirms.net, one in 20 homes has more than $8,000 USD in credit card debt. About 40% of credit card users only pay the minimal amount each month.

Revenue:

The average fee varies from $300 to $700 (or more) per case, depending on the amount of credit cleanup that needs to be done. Because this business has wait times with correspondence, you can easily run cases concurrently.

Resources:

Industry-Specific Websites:

ECRA

PIC Association Credit Repair Business

Credit.com

AAA Credit Guide

Credit Info Center

Courses:

Fair Credit Reporting Act Certification

The Human Equation

Franchises and Affiliates:

Franchise Gator

Associations:

ECRA

Federal Trade Commission

FDIC and the Fair Credit Reporting Act
National Association of Credit Service Organizations

Nationwide Credit Alliance

Software:

Dispute Suite

Credit-Aid