Do you want to start a credit repair agency online? If YES, here is a complete guide to starting a credit repair business from home with NO money and no experience.
Okay, so we have provided you an in-depth sample credit repair business plan template. We also took it further by analyzing and drafting a sample credit repair agency marketing plan backed up by actionable guerrilla marketing ideas for credit repair companies. In this article, we will be considering all the requirements for starting a credit repair agency online. So put on your entrepreneurial hat and let’s proceed.
Why Start a Credit Repair Business?
To start a credit repair business is simple and your timing couldn’t be better. A credit repair business has unlimited profit potential and a low start-up cost. This industry identifies errors in credit reporting and disputes inaccurate information with the appropriate organizations to improve credit ratings. These services are typically undertaken on behalf of a client who has known credit problems, such as a recent bankruptcy.
Drowning in debt often leads consumers to fall behind on making their payments, which ultimately destroys their credit. If you have a background working in the debt and credit industry, you may be looking to open a business that aligns with your experience. You can start your own credit repair and debt settlement business to help consumers regain control of their finances and repair their credit simultaneously.
If you enjoy helping people solve their financial problems and have expertise in the field, now may be the time to open a debt repair company of your own. Focus your attention on important aspects to consider before starting a debt repair company, and create a set of rules to follow to give your business a positive start. You will be asking people to trust you with their personal finances, so establishing yourself as a professional financial expert is essential to your company’s success.
Starting a Credit Repair Business from Home – A Complete Guide
- Industry Overview
The credit counselling and credit management industry represents over 5,000 established businesses that employ more than 15,000. Each year, these businesses aggregately generate more than $2 billion dollars a year of revenue and provide gross annual payrolls of $600 million dollars.
- Interesting Statistics About the Credit Repair Industry
The growth rate for this industry has been tremendous over the last five years as the growth of financial transaction over the Internet has increased significantly. Over the last five years, the number of agents operating within this market more than doubled, with income received by these firms increasing more than 300%.
As lending has become much more scientific over the last decade, there is the need for consumers to maintain strong credit profiles is tremendous. This is especially true in today’s economy where millions of people have over extended themselves with debt, and require professional assistance with loan renegotiations, credit repair services, and credit advisory services
Credit repair service firms offer consumers multiple services to help improve or re-establish their credit worthiness and ability to obtain more credit. Before consumers can engage in any one of these services, though, most receive a general credit repair consultation to assess their credit status, discover what issues may need to be disputed and are assigned a professional credit advisor to handle the case.
Many firms will offer consultations for free or for a nominal fee in order to attract potential new customers. Thus, credit consultations account for the smallest share of industry revenue at about 3.7% in 2015.Many firms also segment their businesses into programs by level of services.
Over the past five years, many internet-savvy consumers turned to an increasing number of free online services, hurting industry revenue. Additionally, aggregate household debt slowly decreased over the period, along with the national unemployment rate, lessening the need for industry services. Revenue for the Credit Repair Services industry will continue to decline in the five years to 2020.
As the economy improves and the unemployment rate continues to decline, the growth of consumer debt levels is expected to grow at a slower rate. Consequently, there will be a narrower scope for growth in credit repair services in the coming years.
Conversely, credit repair is designed for consumers that have suffered an economic event, are back on their feet and trying to do the same for their credit report. Economic events include: bankruptcy, identity theft, divorce, medical events or loss of job. Once a consumer is beyond the event and recovering financially, there are often inaccuracies reporting that could prove costly to their credit score, preventing them from obtaining the most favourable credit terms.
Starting a Credit Repair Business – Market Feasibility Research
- Demographics and Psychographics
A credit repair business can be a highly-profitable, recurring-revenue business with very low overhead. This makes it the ideal start-up. The recent crisis in the economy has negatively impacted millions of hard working individuals who can now benefit from your services.
Millions of Americans need to repair their credit to qualify for a home loan, lease an apartment, obtain a car loan, get a credit card, or even apply for some jobs. In addition, by repairing their credit people can save thousands of dollars in lowered interest payments, and much more.
That is to say that the amounts of individuals from all works of lives that will need your service as a credit repairer are unquantifiable.
- List of Niche ideas in the Credit Repair Business
The pool for credit repair business opportunity is so large, that anyone can get lost in the deep end. You want to narrow your customer base to draw in more customers than you would have if you went after everyone in the pool. If you focus on a smaller number, you are likely to capture more people. Focusing on a specific can be the only thing you need to be able to wield the power of solid income.
They may include
- Credit Repair Business for Woman
- Credit Repair Business for Single-Mothers
- Credit Repair Business for Battered Woman
- Credit Repair Business for the Recently Incarcerated
- Credit Repair Business for an ethnic group
- Credit Repair Business for people recovering from a substance abuse
Level of Competition in the Credit Repair Business
Most industries in the United States went down with the ship during the recession, but the Credit Repair Services industry was not one of them. As consumer’s credit scores dropped in the face of late payments due to unemployment and reduced income, industry demand rose at a brisk pace. As the recovery got under way in 2010 and 2011, that growth moderated, but increasing revenue is still expected throughout the next five years.
The Credit Repair Services industry largely moves countercyclical to the business cycle; as such, the recession increased demand for credit repair services due to rising unemployment and falling disposable income. These factors, coupled with an increased debt load taken on by many consumers during the housing boom, caused many households to fall behind on payments.
List of Well Known Brands in the Credit Repair Business
- Lexington law
- Skyblue blue credit repair
- Mycredit group
- Scorecure credits
- The credit people
- Credit saint Inc.
- Credit Repair inc
- Credit assistance network
- Ovation credits
- Fowler and Fowler credit and debts services
- Veracity credit repairs
Prior to the recession, the amount of consumer debt increased to a record high while the personal savings rate declined to a record low. Strong economic growth caused overly confident consumers to take on exorbitant amounts of debt. An increase in the average consumer’s outstanding debt occurred largely because banks offered home loans to a larger proportion of the population.
Ultimately, these factors set the ball in motion for the industry when the housing bubble burst. “Consumers that were overextended on credit lines were particularly vulnerable when house prices began to fall and the unemployment rate started to rise”.
Ultimately, more consumers have turned to credit repair services over the past five years for a variety of services, including credit repair consultations and credit reestablishment. Rising demand has caused more firms to enter the Credit Repair Services industry, which remains highly fragmented. In the five years to 2012, it is estimated that the number of industry operators has increased 3.7% on average annually to 127,548, many of which are non-employers. No single firm accounts for more than 5.0% of industry revenue.
It is also estimated that revenue for the Credit Repair Services industry will grow over the five years to 2021. During that time, the industry is expected to experience more regulation as the Federal Trade Commission (FTC) cracks down on predatory service providers.
Such crackdowns are not new, however. In 2008, the FTC teamed with 24 state agencies to root out a variety of offenses, including deceptive practices and charging advanced fees for services, both of which violate the Credit Repair Organizations Act. These crackdowns are expected to increase over the next five years and weigh on industry margins.
Is a Credit Repair Business Worth Starting from Scratch or is Buying a Franchise Better?
Franchising is one of the safest ways of owning a business and becoming your own boss. It’s brand recognition, a trusted product and corporate support which is an essential feature if you want to make name and fortunes in the credit repair business.
Buying into a franchise in the credit repair business grants you some major advantages like
- Following a Proven Business Model
- You know exactly what you’re getting
- You’ll Be Selling an Established Brand
Possible Challenges and Threats of Starting a Credit Repair Business
If you’ve finally made the decision to start your own credit repair business, and you do not know much about what it is going to take to do it, but you realize the amazing potential that the business presents. Perhaps you would like to make extra income and simultaneously help people who are having trouble with their debt.
The possible challenges and problems you will face might include:
- Enrolling and completing a debt collection and credit course
- Incorporating the business
- Registering the business with your county
- Creating templates of letters and forms
- Creating a client agreement
- Contacting referral sources.
- Promoting your business
Corporate and affiliate partners are some of the most important relationships you will need for your credit repair company to grow. Corporate partners are local businesses like law firms, CPAs, and designers that you will work with on an ongoing basis for your business needs. It is crucial to build great relationships with these types of professionals for any advice or help you will need as your business grows.
Starting a Credit Repair Business from Home – Legal Aspect
- Best legal entity for a credit repair agency
Starting at business (at home or on the side) is awesome, but at some point, in order to actually become a business you will need to eventually decide whether you will operate as a sole proprietorship/partnership, C-corporation, S-corporation, LLC, or – in some cases – non-profit.
The best legal entities for a credit repair business would be the LLC and the General partnership. A general partnership is an agreement, expressed or implied, between two or more persons who join together to carry on a business venture for profit, Each partner contributes money, property, labour, or skill; each shares in the profits and losses of the business; and each has unlimited personal liability for the debts of the business.
Limited partnerships limit the personal liability of individual partners for the debts of the business according to the amount they have invested. Partners must file a certificate of limited partnership with state authorities while An LLC is a hybrid between a partnership and a corporation.
Members of an LLC have operational flexibility and income benefits similar to a partnership but also have limited liability exposure. While this seems very similar to a limited partnership, there are significant legal and statutory differences. Consultation with an attorney to determine the best entity is recommended.
This both legal entities offers Greater resources for decision making, support, creative activity, Allow greatest flexibility and saves or limits your properties from any debt incurred by the company.
Catchy Business Name ideas for your Credit Repair Business
- Caravan credit services
- Pureheaven credits and debts
- Fortune credit solution
- Wall Street credits
- Standard debts
- New beginnings credit services
- Almighty credit services
- Legit credit repairs
- Blank page credit services
- Goldtag credit repairs
- Clean slate credit services
Best Insurance Policy for your Credit Repair Business
Many business owners feel business insurance is an expense they cannot afford, or is a luxury for more established businesses. Although it is true business insurance can be expensive, it is an expense every business, regardless of the industry, size or length of time in existence, needs to include in its budget.
Insurance has evolved as a process of safeguarding the interest of people from loss and uncertainty even if your business is to protect people’s interest like the credit repair business. It may be described as a social device to reduce or eliminate risk of loss to life and property.
- General liability insurance
- Property insurance
- Errors & omissions insurance
- Business owner’s policy
- Workers’ compensation insurance
- Cyber liability insurance
- Umbrella liability insurance
- Commercial auto / hired & non-owned auto insurance
Protecting your Intellectual Property in the Credit Repair Business
Intellectual property is the area of law that deals with protecting the rights of those who create original works. It covers everything from original plays and novels to inventions and company identification marks. The purpose of intellectual property laws is to encourage new technologies, artistic expressions and inventions while promoting economic growth.
Is Professional Certification Needed to Start a Credit Repairer Agency?
Certification can be another way to improve your skill set to be recognized for your accomplishments. In a world of personal branding and marketing, any advantage that helps in landing a client is worth the effort.
Acquiring certifications shows clients that you remain up-to-date on the newest developments in the credit repair industry, and that you take the time to know your business. As a dept repair professional, you can become certified as a financial planner and consider becoming a certified public accountant as well. Display your certifications in your office, and encourage clients to ask questions about your resume and your professional accreditations.
- International Association of Professional Debt Arbitrators – IAPDA
- Certified Credit Consultant
- National Consumer Reporting Association
- Certified Credit Repair Specialist – CCRS™
List of legal Documents Needed to Start a Credit Repair Business
- Credit repair action (power of attorney)
- Client agreement
- Business license
- Employment agreement
- Nondisclosure agreement
- Memorandum of understanding
- Online term of use
Writing a Business Plan for your Credit Repair Agency
In a world where houses are bought on mortgage, cars are bought on hire purchase, clothes are paid for with credit cards, electricity and phone bills are outstanding and the debts keep piling up with no reasonable hopes of ever coming down, people have no choice but to run to credit repair agencies for succour.
Bad credit is bad. When you have a bad credit report, it feels like the whole financial world is against you. Life becomes much more difficult
The “start first, think later” method is never a good idea when starting any kind of new business. Before even reaching out to your first prospect, make sure you have a well-developed business plan in place. It should cover the 4 basic parts of starting a new business: Finance, sales, marketing, and operations.
This is a great opportunity to reach out to other small business owners to ask for advice and begin building relationships. Keep in mind; you don’t have to spend any money to do marketing. It can all be done with relationships.
Detailed Cost Analysis for Starting a Credit Repair Business
The economy is in trouble. People are having trouble paying their mortgages and their car payments. They are unable to make ends meet. Credit scores are dropping rapidly, and an estimated 80 million people in the country now have bad credit. Banks and other lenders are much tighter with their restrictions now, and that means that many people are not going to be able to get loans in the future.
While this is a dire time for many people, it can also be an opportunity. Starting a credit repair business now can be beneficial for those who are living with bad credit, and it can be beneficial to you.
- credit repair kit – $600
- Training on credit repair – $300
- Credit repair Software – $350
- Credit repair contracts and other legal documents – $600
- Marketing materials – $300
- Website- $70
From our detail research, starting a small scale credit repair business will cost $2,220, a medium scale credit business at $13,670 and a large scale credit repair business at $56,920
- Financing a Credit Repair Business
Most businesses require outside funding, but many small business owners don’t know where to find it, or how much to ask for. Whether you need loans, small business grants, angel investors, venture capital, crowd funding, or investments from friends and family, you can greatly improve your chances of securing business capital. Ways of financing your credit repair business may include
- Personal savings
- Angel investor
- Venture Capital
- Loans and grants
- Alternative funding source like Crowd funding
Choosing a Suitable Location for your Credit Repair Business
An entrepreneur has many concerns: funding, staffing, developing a marketing strategy and ensuring that they have a viable product or service. Before beginning the process of starting a business, however, there is one important decision that must be made: where to start the business.
The adage “Location, location, location” has merit, not only for real estate, but for a successful credit repair business venture. A variety of features will affect what makes a location suitable or not suitable for your credit repair business, and the wise entrepreneur will examine those features carefully before deciding to move forward with a venture.
Many times, the location of the company is decided based on what is good sense for the entrepreneur, with little thought or regard paid to the location of the company. While it is nice to think, “If I build it, they will come!” the reality is that the company that uses the motto, “If I build it where they are, they’ll come” may, in the end, be more successful. A suitable location for your credit repair business must have the following;
- Access to funding
- Tax and legal incentives
- Office costs
- Staffing needs
- Quality of life
- Access to incubator programs
Starting a Credit Repair Business – Technical and Manpower Analysis
You cannot start a credit repair business without software. Software saves time, which makes it possible to scale your business. We recommend TurboDispute.com, The best Web-Based Credit Repair Software CRM. Turbo Dispute will Import Credit Reports and Scores in seconds saving your hours of typing and manual data entry. It also includes built-in private label credit repair client and affiliate portals with full access for your team, your clients, affiliates and leads.
It’s everything you need to start, run and manage a credit repair business. Also it will help you handle credit disputes faster than any other method. Because it’s web-based, all users have instant access from any computer, tablet or smart phone. Try it free for 30 days at www.turbodispute.com
The best credit repair software helps consumers or credit repair specialists keep track of the correspondence between creditors, consumers, and credit bureaus. By keeping track of the dates on which correspondence is sent and received, this software helps to ensure that disputes are addressed in a timely manner.
For example, in the United States, credit bureaus typically have a limited time period during which they must verify information or delete it from the consumer’s report. If the consumer or the credit repair specialist is aware of this time frame, he or she is in a better position to demand the deletion of information by proving that the credit bureau has not completed its investigation within the time allowed by law.
Good credit repair software should also provide well-written dispute and validation letters to use during the credit repair process. When considering software, ask its manufacturer about the authorship of these letters. Ideally, they should be written or approved by licensed attorneys who are familiar with credit reporting issues.
The Service Process of a Credit Repair Business
Good credit starts with fixing your clients credit report and removing negative information. The whole key to the credit repair procedure is that if a credit bureau cannot verify information on your credit report within the time allowed by law, they must remove it. For instance, if a collection agency is reporting a collection on your report and they cannot verify the information, the credit bureau must delete the entry.
Starting a Credit Repair Business – The Marketing plan
- Marketing strategies for a credit repair business
If you are interested in advising others on how to solve or fix their credit problems, then starting your own credit repair business may be a great option. Credit restoration counsellors meet, talk and help people that are having trouble paying off debt and raising their credit scores by providing advice and solutions. Of course, if you are going to start your own business in credit repair, you must remember to market yourself.
Below are ways to not only market your new business, but also market it at a low cost.
- If you do not have business cards, stationary, envelopes or letterhead with the company information on it, have them printed up as soon as possible. Having these things will not only tell people that there is a new credit repair business in town, it will also tell them that you are professional and you take your work serious
- Have flyers printed up with all of your business information on them. Include your contact information, your slogan (if you have one) and what you do. Post these flyers all over town and in certain businesses where there is a lot of traffic.
- Advertise that you are a new business by putting an ad in the newspaper, on an online classifieds site and/or in the yellow pages.
- Being a counsellor in credit restoration involves building a client base. To advertise your expertise, offer free services at a credit repair seminar. Have people recommend you and offer services at a discount to those that bring in new clients.
- Become actively involved in your community. The more people you know, the more potential clients and recommendations you could potentially have. Have business cards ready to hand out at any social event.
- Offer to be a speaker at a public event and speak about the issues with credit reports and debt and ways to repair credit. Most places will pay you for speaking and you will also get the publicity that your new credit repair business needs.
- Send out letters describing what you do and what your business is with all of your contact information. Be sure to put a business card in the letters.
- If you own a vehicle, have your credit restoration company’s name and contact information printed on a magnet or on the side of your vehicle.
- If you have any clients already, have them write out testimonies that you can hand out or post on a website.
- Always be on the lookout for free ads and new places to advertise.
Finding the Right Service Pricing for your Credit Repair Business
Millions of people around the country are struggling with their debt. They do not know where to turn or what to do. With so many people suffering from bad credit today, this business makes quite a bit of sense financially. Remember, the goal is to scale your business. How do you do that? Slowly and methodically, with reasonable pricing, good service and happy clients who keep your service very long time
Credit repair services charge in two different ways. Firstly, they charge for the initial work that generally includes an analysis of the client’s credit history and provide ideas of how they can improve their FICO score. For more in-depth help, including help with disputes, the removal of negative items and payoff resolutions, they may need to pay the monthly subscription fee since it generally takes a minimum of 60 days to start seeing results.
None of the services reviewed locks a client into an annual agreement. This means once they have reached their desired credit goals, they can cancel the service and no longer pay the subscription fee.
Possible Ways to Win Competitors in the Credit Repair Industry
Since competition is already so dense in the credit repair business, you need to establish your difference from your competition in your own unique way… because for most credit repair businesses, the how and what are the same.
- When you convey the unique way to your credit repair consumer prospects, you are far more likely to win their business over your competition.
- Once you establish your why or your purpose in chasing your credit repair business opportunity, the rest of your marketing efforts are made pretty simple.
- Whether you entered the industry years ago, or you’re a fresh credit repair start-up, you’ll need great software you can create your credit repair marketing efforts on and eventually use that same software to launch your marketing campaigns. Easy to use, template, marketing materials to help you push out your marketing message (or your marketing “what, how and why”) to your prospects, will save you mass amounts of time and effort usually needed to push your credit repair business to the next level of business growth.
- When your credit repair business software- that you get to help you manage and run your credit repair business, allows you to not only automate your dispute process but also your marketing efforts, you can worry more about providing your consumers with more. More of what you are going to help them with, more of how you are going to help them with it, and more of why you are going to help them with it.
Possible Ways to Increase Client Retention in the Credit Repair Business
Too many business owners run their companies like a bucket with a hole in it. They pour the water—customers—in at the top, but don’t pay attention to what’s leaking out of the bottom.
The competition in the credit repair business is based on getting and retaining customers. The customers who keep coming back to your business are your most valuable assets. The most loyal 15 percent of customers account for 55 to 70 percent of total sales. Making sure they stay happy is the secret to a sustainable and highly profitable business.
In other to retain your customers in your credit repair business, you have to
- Provide Exceptional Customer Service
- Use email marketing
- Introduce a Loyalty Program
- Create a system for complaints
- Develop an Outstanding Product or Service
Strategies to Boost Brand Awareness and Create a Corporate identity in the Credit Repair Business
Brand awareness is the only way potential customers know who you are and what you do. Without it, your company can toss its snazzy content marketing out the window. Successful brand awareness is more than simple name recognition. It also requires that consumers know what you do on the most basic level.
- Referral programs
- Guest blogging
- Local partnerships
- Focusing on your target audience within only one or two social media platforms, rather than trying to be everywhere all the time
- LinkedIn Publishing
- Discovering and tapping into your brand’s unique personality
- PPC advertising
- Paid social advertising
- Influencer marketing
Creating a Suppliers/Distribution Network for your Credit Repair Business
People are having trouble paying their bills and are unable to make ends meet. Credit scores are dropping rapidly, and an estimated 80 million people in the country now have bad credit. While this is a dire time for many people, it can also be an opportunity. Starting a credit repair business now can be beneficial for those who are living with bad credit, and it can be beneficial to you.
Consumers need help, and you will be able to provide that help to them. With the knowledge of how to repair credit easily and legally, you will be providing a quality service that people desperately need. Most people do not have any knowledge of how to fix their own credit, and they do not feel that they can take the time to learn how to do it. Starting a credit repair business helps them, and you will be able to make a nice profit from your services. As long as you are charging a fair amount and doing a great job, then word of your service will spread.
Tips for Running a Credit Repair Business Successfully
Helping others repair their credit history and have a fresh new head start on life is extremely rewarding. While it’s true that consumers can do this very same work themselves, most do not want to deal with the aggravation of talking to credit bureaus to correct mistakes, handle disputes or negotiate with creditors. This is where you come in to handle all that for them.
Handling other people’s problem can be tiresome and frustrating, but this business is a lucrative one and to run it successfully you will need to do the following;
- Get a copy of your own credit report to study.
- Learn as much as you can about the credit reporting system.
- Understand your role in the process
- Understand what you are selling and take care in what you promise
- Work smart and minimize your time spent working
- Understand how to promote and market a credit repair business
- start small and work out kinks before expanding too quickly
- choose an easy and reliable Credit repair software