Weak credit seems to haunt a person no matter where he or she goes. That new car, home, or business can feel like a hundred miles away when they know their credit score isn't up to snuff.
Past mistakes should not hamper someone's future. That is where a credit repair business comes into the picture.
It can help dig them out of their credit score slump, raise their financial portfolio, show worthiness, and embark on worthy financial adventures.
So, if helping people get back on their feet so they can invest in what they love is something you liked to do in the past, then maybe starting a credit repair business is your next business move.
But first and foremost, you will need to consider this business as a separate legal entity, providing doola formation services that protect one's assets.
Now let's get you started on your successful venture.
What Is a Credit Repair Business?
A credit repair company rebuilds credit. And there is just so much that can go wrong, it seems, about how a credit score might be low-from identity theft to the wrong address, to the wrong name.
A credit repair professional helps rebuild that credit by contacting a credit bureau and rectifying those negative marks.
Credit counseling is, in a way, financial advice that can help a person rebuild their credit rather than going through the motions manually.
The credit repair companies view your credit score in depth, identify all the details attached to it, and then restore it to be squeaky clean for the future.
8 Steps to Starting a Credit Repair Business
One bad mistake in the past shouldn't hold people back from planning their future.
Alas, the nature of credit impacts those individuals if they don't get help from a capable and skilled credit repair company.
Be that business for those struggling so they can achieve their life's biggest financial milestones!
1. Know Your “Why”
Before you start anything, understand why you want to start your credit repair business.
Have you ever had to fight through bad credit and turn your life around when it got back on track?
Do you personally know people who cannot buy a house because their credit score is too low?
Every small business will face roadblocks, struggles, and times when you just want to close your computer and call it quits.
But knowing your "why" will give you an innate reason to keep going.
Whatever it may be, find it for yourself, and let it propel you through even the roughest of points in your business.
2. Complete All Your Credit Repair Business Requirements
Let's face it, credit repair companies have a bad rap. In 2021, the FTC received 3,151 reports of credit repair fraud.
There are plenty of scammers out there who masquerade as credit repair companies and disappear with people's money once they get hold of it.
Due to all the fraudulent companies, federal as well as local government administrations have included laws to safeguard the citizens from credit repair fraud and foster actual companies.
License: Many states require a license to operate a credit repair business, and some will not allow it, meaning operating a credit repair company can be entirely illegal.
Check out this handy map from Credit Repair Cloud for what your state's law may be (but remember, the laws are always changing, do your due diligence and research for the most up-to-date information).
Credit Repair Organizations Act: This will prevent these companies from acting illegally in providing misleading reports and false information, common amongst fraudulent ones.
Fair Credit Reporting Act: This law is saying that everybody should have the right to obtain their credit report.
Surety Bond: The credit repair companies would need one to be able to prove to the world that their activities are legitimate amongst the huge lists of fraudulent ones.
3. Identify Your Target Market
Reflect on your why, and you may get a target market. Find through research who in your neighborhood or online you see who is dealing with bad credit.
Are these people in need of a better knowledge of financial literacy to one day buy a home? Or those who want to begin their small businesses but cannot obtain a business loan due to mistakes surrounding poor college management with finances?
Knowing a concentrated, specific target market doesn't necessarily keep you from getting other businesses; it will instead help you zero in on where you can market your services and how to find clients who may be desperate for your service.
4. Write Out Your Business Plan and Work With a Strategy
Create a business plan that will keep you focused on your short-term and long-term goals. Business plans are not a one-size-fits-all approach but can be written in a fashion of your choice. Some key aspects of your credit repair agency business plan are:
Supply and Demand: What research did you do when determining your target market? What is this community struggling with, and how can you solve their problem?
Marketing Strategies: Identify how you will reach your customers and relay your business to them. You will find this time in particular to be very handy as you take advantage of the credibility and legitimacy of your business, especially considering the proliferation of fraudulent credit repair businesses everywhere.
Projections- Cost and Pricing Structure: I will also explain how one is going to charge for services. Do I charge every month by taking some set time that it should take to rebuild their credit, for each derogatory mark you eliminate, or do you just have a flat fee you charge every customer? Describe why you chose this approach and how it will help you scale.
5. Decide on the Type of Business Entity
Okay, let's go through the other logistics checked off if we're being financially responsible. If you haven't already, create a business entity for your credit repair business so that you at least have a legitimized company.
There are several types of business entities you can choose from.
Sole Proprietorship or General Partnership: This is a casual business arrangement where the owner will not be protected from the business itself, in case of legal claims. Sole props have only one member (founder), but general partnerships have more than 1. Limited Liability Company or Limited Liability Partnership (LLC or LLP): This is a formal business arrangement that will safeguard the owner of the business. For example, it can either be a single-member LLC or an LLP.
S Corporation (S-corp): A legitimate business that also separates a business owner's liabilities from their business and has less than 100 stakeholders.
6. Open a Business Bank Account
Once you've decided on a business type, it's time to open a business bank account.
Envision how long it will take you to dig through all the profits earned amidst your clothing returns, grocery store runs, and rent payments.
How much easier will it be to do everything related to your business in one place?
(Plus, if you are helping others improve financial visibility then isn't that something you should do as well? )
7. Choose a Credit Repair Software
The right software will help you help your clients. Take a look at some of the best credit repair tools to help you deliver better results for your customers:
Dispute Bee: It helps import credit reports easily, automatically write up dispute letters, and wait for responses, all followed in Dispute Bee.
Credit Repair Cloud: This is how they help new credit repair business owners, like you, get started with your business by giving you credit software and a business challenge when you join.
Credit Detailer: This is a one-time fee software for the credit repair business owner in English and Spanish.
8. Market Your Credit Repair Services
Through your project management and CRM tools, you will eventually establish a list of customers that you could help, creating automation to instill referral programs to help you get more business!
A referral program is one of the best ways to gain more clients, especially for a high-risk business like credit repair, where friends telling friends can be the difference between your market seeing your business as fraudulent or friendly.
Marketing is an ongoing process, but the sooner you start, the sooner you will be able to adapt and change what's working best for your better interest:
Build Awareness of Your Brand on Facebook Groups: Search for small business owners, entrepreneurs, or finance enthusiasts in your area who may ask for your service. Just make sure not to shout it out too much, though, since there usually are group guidelines on self-promotion.
Instill a Referral Program: Build trust within your community. As I have also discussed above, friends mentioning friends will make it easy for you to build trust with the target market! You can do this through affiliate programs and cash incentives to help spread more positive word about your service!
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