How to Start a Lucrative Credit Repair Business for Almost Nothing

Several business opportunities exist for those wanting to venture out on their own, away from the traditional nine-to-five office life. However, in many cases, hanging your own shingle requires an outlay of cash that isn’t always easy to come by.

For some businesses, owners need capital to secure a physical location, create a legal business entity, and acquire the equipment necessary for running a successful operation. Fortunately, alternatives are out there that allow for small business ownership without a significant up-front investment.

One potentially lucrative option is establishing a credit repair business. This can be done from the comfort of your home, with minimal money required. Understanding what a credit repair business is, as well as the benefits and risks involved in the process, is crucial to getting off on the right foot from the beginning.

Here’s what you need to know about starting a profitable credit repair business for next to nothing.

Breaking Down the Credit Repair Business

Credit repair businesses are gaining traction among business-minded individuals who have a desire to help others on the financial front. In a credit repair business, you provide services that give customers a way to improve their credit score and more easily qualify for new credit in the future.

Primary Role

For most credit repair specialists, services revolve around disputing erroneous information found on a customer’s credit report, and communicating with the credit bureaus and creditors to correct inaccurate entries. Removing these entries from a credit report boosts one’s credit score, helping them get access to the credit they need.

Who Can Do It?

The business of credit repair may be a natural addition or alternative for those who have worked in some form of financial services previously, or those in ancillary industries. For instance, mortgage brokers or real estate agents, financial advisors, or bank or credit union customer service employees could easily shift gears to a credit repair business. However, anyone who has the willingness to learn about repairing credit for others and a desire to lend a hand can start a credit repair business – from home.

Basic Necessities

The credit repair business model is straightforward. After deciding to go this route for business ownership, you can get started with a laptop, a mobile phone, and a little bit of training. The most successful credit repair companies invest in marketing to find ideal customers and technology tools to ease the workload. However, all of this can be done with little money out of pocket to start.

Getting Started on Your Own

There are a handful of steps to begin a credit repair business, most of which connect to following state and federal regulations for calling yourself a credit repair company. Here’s what you’ll need to do:

1. Understand the Credit Repair Organizations Act – this federal law prohibits credit repair companies from misleading consumers by making false claims about their services. For instance, advertising that you guarantee an increase in a customer’s credit score in a matter of days is misleading, since credit repair takes time and it may not result in a substantial credit score boost. Additionally, credit repair businesses must provide a written contract to the customer, which allows for cancellation within three days of receiving. This Act also states you cannot charge for services in advance, but instead, fees are paid once work is completed.
2. Comply with state laws – some states require a surety bond to be in place as part of the business licensing or registration process for a credit repair company. Be sure to check with your state’s licensing department to determine if this is necessary, and if so, the amount of bond required.
3. Establish a business entity – as with other business endeavors, having a legal business structure like an LLC can be beneficial in separating your personal assets from the business. This process is fairly easy to do either with the help of online resources or through a business attorney, and the cost is typically small.
4. Consider software needs – several companies offer credit repair business software that makes running the business easier. Some offer customer onboarding services and payment acceptance, as well as automatic generation of dispute letters or communications with the credit bureaus or creditors. This frees up some of your time as a business owner to work with more customers or market more effectively.
5. Create a marketing plan – credit repair companies are a popular choice among those looking for a low-cost business to start, so that means competition can be fierce. Be sure to lay out a thoughtful marketing plan, including who you will advertise to, through what mediums, and the amount of money you want to spend doing so. Having a website and social media pages is a crucial part of this process, so plan to invest a bit of time and money here as well.

Benefits and Potential Risks

Both benefits and risks exist with starting a credit repair company, and these should be weighed carefully before venturing out. On the benefits side, credit repair businesses have the potential for the following:

• The ability to help others who are in need of credit repair services
• Creating a home-based business that does not require physical office space
• Minimal up-front costs
• Generating a recurring revenue stream from monthly service contracts with customers
• The ability to work full- or part-time as a credit repair business

Although the advantages are clear, credit repair businesses also face risks. These include:

• The cost of marketing in a highly competitive industry
• The need to complete training to understand how credit repair works before taking on customers
• Legal risks that come with failing to comply with state or federal laws
• Paying for software that helps automate the credit repair process

Overall, starting a credit repair business can be a lucrative path for those who are willing and able to put in the work. If you’re wondering how much you can make in the credit repair business, plug in the price of your services and the number of customers you can take on each month with this helpful calculator.

With that number in mind, be sure to calculate your expenses, including software, marketing, and licensing or registration requirements for the business to see what your credit repair business could generate in terms of profits.