As of 2021, there are over 69.000 credit repair businesses in the US alone. Every third American needs help to improve their credit score, making the credit repair industry a lucrative business to anyone willing to spend time and effort helping others.
Starting a credit repair business can be a great way to help people fix their credit and improve their financial situation. This can bring you profit as well as the satisfaction of helping others repair their credit score. So, here are five steps to starting a credit repair business from scratch, including writing a winning business plan, obtaining credit repair software, and choosing the right pricing method.
Create a Business Plan
All businesses, no matter their size or the industry they operate in, should have a business plan in place, for two major reasons. The first one is to attract potential investors at different stages of their development. The second reason is to track their progress over the years, as it is recommended to update your business plan annually.
Business plans should consist of all information about your business in detail. You can easily create it yourself by following templates online, or you can hire a professional to do the job quickly and efficiently.
Legal Paperwork
Before starting your own credit repair business, you need to be well aware of the licenses and permits you need to obtain to avoid hefty fines and to operate your business legally. In general, you’ll need to get a business operating license and insurance for your company, yourself, and your employees. The insurance will protect you in case of court trials, losses, or accidents.
Credit repair companies can also file for bonds. The future of your client’s credit score can never be certain. In case things go south and your service does more harm than good to your clients, then they’ll be compensated for the loss through those bonds. To inform yourself in detail, make sure you contact a local attorney who will explain the process.
Educate Yourself
While credit repair professionals are not obligated to have a degree, they should have a certificate. This guarantees to your clients that you have the needed knowledge to help them. There are a lot of online courses, both paid and completely free of charge, that come with a certificate.
The course you choose should explain how credit works, why some people have bad credit scores, and depending on that reason, what is the best way to improve their credit score. For a short time, you’ll gain the knowledge to get started, and from then on, you’ll learn from experience and different cases.
Choose a Pricing Method
Credit repair is a process without a definite date, and it can last from several weeks up to a couple of months, depending on the situation. That’s why credit repair companies have different pricing methods, and here are the most common ones.
- Subscription-based. Through this method, the client is charged on an established cycle, for example, every 30 days. Many companies charge a starting fee as well, but you can skip that step if you prefer.
- Flat fee. Some companies can charge their clients for months without doing any work for them, which does harm to the client. That’s why many companies opt for the flat fee pricing method.
- Pay per deletion. The client only pays a modest fee per deletion, without a monthly subscription.
- Guidance only. Sometimes clients just want to consult professionals about their credit scores, in which case the credit repair company only guides them with online templates and information, without doing the work for them. Usually, companies charge anywhere from $200-$400 for this.
Credit Repair Software
Once you sail into the credit repair business waters, you’ll realize that you need good software to make the job easier for you. The one you choose should be easy to use, highly functional, and within your budget.
As your business grows, you’ll also need good software that can grow with you. Make sure the software you choose can be easily upgraded or scaled to accommodate more users or more features. You should also consider the support system the software company offers. When something goes wrong, you want to be able to get help from the software company quickly. Make sure they offer good customer support and that they’re responsive to questions and concerns.
Bottom Line
If you’re considering starting a credit repair business, there’s no time like the present. With people looking for help to improve their credit scores, the credit repair industry is blooming. By following the steps we’ve outlined in this post, you can set yourself up for success and help give consumers the financial future they deserve.
