How to start a credit repair business

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To start a credit repair business, you need to meet all of the legal requirements, purchase business credit repair software, and create a website for your business. For details on each of these steps and others you can take to start a credit repair business, use this guide:

Meet all of the legal requirements. There are three areas we are going to cover in this step. It is an extremely important step to take if you want to legally operate your credit repair business.
Credit Repair Organizations Act (CROA)
This is the most critical set of laws you need to familiarize yourself with when starting a credit repair business. CROA is a set of federal laws that were passed in 1996 which regulates all credit repair businesses in the United States. It keeps credit repair businesses from taking advantage of consumers, participating in unscrupulous practices, and making false claims.
CROA is enforced by the United States Trade Commission (FTC). The FTC has the authority to fine, penalize, and in some cases shut down any credit repair company that breaks laws laid out in CROA.
There is a lot of information in CROA, and you should read it in its entirety, but here is some of the major takeaways:
- Credit repair companies are strictly forbidden from misleading their clients about what services they offer, what services they will perform, or making false guarantees that are not followed up on.
- Credit repair companies must provide their clients with a written contract, and have them sign it. This contract has to have a provision that enables the client to cancel the contract within three days.
- Credit repair companies may not charge for any credit repair services in advance of services rendered. Many credit repair companies provide an initial consultation and credit report analysis and charge the client a starting fee once the work has been done.
Bonds
This is the next important legal requirement you should look into. Depending on the state in which you are starting your credit repair business, you might need to acquire a surety bond. Credit repair surety bonds protect your customers from any possible damage that may come as a result of your businesses' credit repair services.
The total amount of the bond varies, according to your state, and some states do not require you to purchase this bond at all.
The average price of a surety bond falls between $200 to $300 in most states. To get approval for a bond, you need to fill out an application, and pay a fee once approved.
The application you fill out is based on your financial assets, credit score, taxes and debts, and other public financial information, like if you have ever filed for bankruptcy. It also requires you to state how long your credit repair business has been operating and the amount of the surety bond you are seeking.
The application process is normally very fast, and you can sometimes gain approval within 24 hours of submitting your application.
License and Registration
Currently credit repair businesses are not legally required to gain a license in any state. However, half of the states in the US do require you to register your credit repair business.
Registration of a credit repair business typically involves filling out an application that will register your business as a Credit Services Organization, or a similar organization title, in the state you are starting the business. You have to pay a registration fee as well.
If you are starting your credit repair business in any of the following 25 states you need to meet their registration requirement:
- California
- Delaware
- Illinois
- Iowa
- Kansas
- Louisiana
- Maine
- Marland
- Minnesota
- Mississippi
- Missouri
- Nebraska
- Nevada
- Ohio
- Oklahoma
- Oregon
- South Carolina
- Tennessee
- Texas
- Utah
- Virginia
- West Virginia
- Wisconsin
You should contact your state's Department of Revenue to find out specific details on registration requirements for your credit repair business.
Purchase business credit repair software. You need to have a business credit repair software platform to properly operate your business.
One of the most common ones is DisputeBee, but there are many options to choose from. This kind of software allows you to maximize your efficiency and efforts, and will get faster and better results for your customers, while also allowing you to spend a minimal amount of time each month on manual duties.
Good business credit repair software enables you to only spend around five to ten minutes of time working on each of your clients' disputes every month.
Most of your daily activities overseeing a credit repair business will be onboarding new clients and providing consultations, developing and sending dispute letters to furnishers and credit bureaus, providing customer service to your clients, and keeping them up to date on all progress that has been made.
Automating these tasks with software is a way to organize and expand your credit repair business. It will keep your operation running smoothly and effectively, and give you the opportunity to scale up your business when appropriate.
When you use credit repair software you can expect a workflow something like this:
- When you get a new customer you create a profile for them in the software program
- Ask your customer to get credit monitoring, and to give you their credentials
- Upload the client's credit report into the credit repair software program, and then review it
- You can then generate a set of dispute letters with just a few steps using the software
- Then you can send those disputes, sometimes straight from the software program
- After around 30 days, you then review any responses you have received for your client from credit bureaus, and then generate a new batch of dispute letters with the software
- You then repeat this process with every new customer or client
Effective credit repair software enables you to keep track of your client list, including all of their documents and personal information. You can usually import your client's credit report with just one simple click.
Another advantage of using these programs is that you can easily identify negative elements on a credit report, such as late payments, collections, inquiries, bankruptcies, and other items as well.
The ability to automatically generate dispute letters that are ready to send will save your business countless hours of work. Most software programs are also designed to provide you with the addresses of the credit bureau, furnisher, collections agency, banks, and other creditors.
With just a click of your computer mouse, you can send those dispute letters via USPS certified mail or standard mail. You are not required to download or print any documents, and you also don't have to stuff a massive amount of envelopes with dispute letters.
Credit repair software is the way to go if you want to run a smooth and effective business that will have the opportunity for expansion.
Create a website for your credit repair business. Your website is an extremely important aspect of your credit repair business. Most of the time this will be the first impression given to potential clients.
You should aim to create a website that is professional, and friendly (in terms of visuals and navigation). You want your website to instill confidence in your clients and potential customers.
Your credit repair business' website should be able to generate new leads and have a section dedicated to customer registration, so you can easily follow up by phone or email.
If you have the available funds, you should definitely hire a professional web designer to create your company's website. This is well worth the extra money because they are likely to create something that is visually appealing and great in terms of functionality.
Set up your client billing and invoicing. Setting up credit card processing and invoicing can be confusing, at least at first, but another great aspect of credit repair software is that many of these programs have these functions built into them.
Your first step in this area is to create what is referred to as a payment gateway. This serves as a secure entity that can receive your client's credit card information, and then sends it to your merchant account for proper processing.
The next item you need to create is an actual merchant account. This will work directly with the acquiring bank to process each credit card payment. Then it deposits it directly into your business checking account.
Lastly, you need to establish a recurring billing system that is easy to navigate, review, manage, and ultimately control your billing processes. These systems also deal with automatic billing and invoicing your clients every month, so you don't have to do this manually.
Once your client signs the credit repair contract you have provided them, they can start a subscription and enter their payment information into the client portal. You can also choose to collect payment information manually if you would like.
Most credit repair software will have your client payments and subscription statuses on their software dashboards. This helps to keep you current on any clients that fail to pay invoices, and notifies you when they are past due. You can then choose to contact the client to request payment or cease working on their credit issues.
Determine dispute strategies. To run a successful credit repair business you need to determine dispute strategies that will get removals and deletions for your client.
This is the name of the game, the most important aspect of your credit repair business, and a way to gauge your success. Your clients are paying your company to get negative information removed or deleted from their credit reports.
You want to use the most effective methods that will result in the highest rate of deletions for your clients. Doing this keeps your customers satisfied and gains your business a strong reputation in the credit repair industry. This also often results in customer referrals you get from clients that can vouch for your excellent services.
Here are some details on different strategies you can employ in this area:
Initial Credit Freeze
Once you get a new client, the first tactic you want to take is an initial credit freeze. This ensures that no one can access your client's credit information. To do this you want to freeze their credit at LexisNexis and SageStream.
This prevents the three main credit bureaus - TransUnion, Experian, and Equifax - from having the ability to cross-reference their own information and data with LexisNexis and SageStream.
When you do this, you are going to obtain more deletions for your client. This happens because these credit bureaus are not able to verify your client's inquiries or accounts with these third-party sources.
Attempt to remove outdated and old addresses
This is another step you should take right after your client signs up for your credit repair services. Old addresses of your clients can sometimes be linked to collection accounts and charge-off accounts. The removal of these addresses makes it more challenging for these accounts to be verified.
Credit bureaus use electronic verification systems, and sometimes these can even produce automatic deletions when they can not link your client's credit report to the account information (old address) that the collection agency or creditor has on file.
Dispute collections and charge-off accounts
Collections and charge-offs are one of the most common negative elements that your clients have on their credit reports. To dispute these, typically, you must apply leverage using laws like the Fair Credit Reporting Act (FCRA).
The Fair Credit Reporting Act has two sections, 609 and 611, that work in concert to stipulate what information credit reporting agencies are required to give, upon a consumer's request, as well as their rights concerning requests for investigation. Any information that is proven to be unverifiable or incorrect, must be credited or removed from the client's credit report.
Disputing Inquiries
When you dispute inquiries for a client you either have to disprove a factual record of access, prove or claim identity theft, or prove a lack of permissible purpose. To get a definition of permissible purpose you should reference section 604 of the Fair Credit Reporting Act (FCRA). It lays out the conditions in which specific types of entities can legally access consumer credit reports.
You can also choose to employ the tactic of freezing your client's credit report at SageStream. Again, this is a secondary bureau that is often used by Equifax, Experian, and TransUnion, to verify inquiries.
Other information
There is other information you might want to dispute on behalf of your clients, once you have a firm footing concerning credit reports and the types of negative information they might contain.
Credit repair software programs often have templates that can be utilized to dispute inquiries, charge-offs, late payments, collections, and certain types of financial records, like bankruptcies.

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