People with poor credit that are struggling to qualify for a credit card, or rent an apartment are usually the ones that benefit from a credit repair company. These companies often promise to help remove negative items from someone’s credit reports, which could help them improve their credit scores, in exchange for a fee. If you’re thinking about starting a credit repair business because you want to help others improve their credit score but you’re wondering where to begin, you’ve come to the right place.
Since the industry is often confusing and varies state by state, it’s important to stay competitive and flexible. To start, writing a winning business plan and adapting to robust credit repair software are only some of the essentials when thinking about starting this type of business.
Read on to learn more about how to start a credit repair company.
Write a winning business plan
Creating a business plan is important for any business, and especially for those planning to start a credit repair business since it will help improve their strategy as well as raise funding. A well-crafted credit repair business plan should outline the vision of your company and document a systematic roadmap of how you’re going to accomplish it.
Every business plan needs to have a few key elements that are important to its success. Usually, a comprehensive business plan needs to include an exclusive summary, company description, industry and customer analysis, marketing and operations plan, a financial plan, cash flow statement, and a balance sheet. Keep in mind that a business plan is also required if you seek loans from investors and banks. The document should be a concise guide of your business idea and the steps you will take to make it profitable.
Follow credit repair laws
The laws for credit repair vary depending on the state you’re functioning in. A few states such as Alabama and Wyoming have no statewide regulations regarding credit repair businesses. However, the majority of states have some regulations that are not too difficult to overcome.
A federal law, CROA (Credit Repair Organizations Act), was passed to regulate credit repair businesses and to make sure they aren’t taking advantage of their clients and sensitive information. Another federal law, FCRA (Fair Credit Reporting Act) was passed to ensure that the credit reporting agencies are properly reporting consumers’ information via all the databases online. This means you’ll have to research and learn more about laws and regulations before starting your credit repair company.
Get the best credit repair software
You can’t open a credit repair business and grow successfully without automation and planning your work accordingly. This way you’ll be able to cut down on the time it takes to make suggestions, do audits, and manage your clients’ requests. Some of the tasks that benefit the most from automation include customer profile creation from a form fill, audits and tagging of negative credit report line items, and customer service management during and after the delivery of services.
In addition, you’ll be able to send repetitive emails introducing campaigns and service updates. A credit repair software will allow you to automate and send out dispute letters for your credit repair business, which is important for scaling at a rapid pace. So, make sure you find the right software for your credit repair business that will help you grow and improve.
Register your credit repair business and set up your pricing
Registering your business is essential because it will allow you to open up a business bank account and become official. Since credit repair is considered a high-risk industry, make sure you don’t skip this step. Whether you’re filing for Sole Proprietor, an LLC, or DBA, speak to a tax attorney or tax professional to help you out. Find out if you need a business license, domain name, or pay certain state fees.
Keep in mind that setting up your pricing plays a big role in the success of your company. Although you can charge whatever price you feel is right, note that the industry average is around $59-$99 a month. Additionally, you can always see what competitors in your area are charging so you can adjust your pricing accordingly.
Starting a credit repair business means you’ll need to have a good strategy if you want to succeed. If you want to become a leading and teaching authority, you need to make sure you have a good business plan as your first step. Target the right audience and make sure you set a good pricing structure for your credit repair business.