Whether you are just getting started with your credit repair business or are looking for ways to make it run better, these 21 tips will get you where you need to be.
#1. Be Prepared for Long Hours
A credit repair business is not a part-time job. If you are looking for an opportunity that you can do a couple of days per week on top of your full-time position, then this is not the option to pursue. It is rarely successful when you try to balance the requirements of this industry with everything else that you’re trying to do with your career.
Most clients, and even their creditors, will not take you seriously if your window of availability is only a couple of hours per week. If you want this opportunity to be profitable, then it needs to be your full-time job.
#2. Develop a Thorough Business Plan
You cannot start a credit repair company and expect success if your business plan involves jumping right into things without understanding what will happen next. Before you reach out to your first potential customer, you will want to have an outline in place that dictates your decision-making process. This document should cover your operations, sales, marketing, and finance needs. If you’re not sure where to start, then this step is a fantastic place to ask other SMBs for advice.
One of the benefits of establishing a company in this industry is that your marketing expenses can be minimal. It tends to be driven by relationships more than advertising.
#3. Find Your Niche
You will want to identify the potential clients that you hoped to target when starting a credit repair business. The decisions that you make in this regard will dictate how you approach your operational, marketing, and affiliate strategies. Since you are working with people who are struggling with their bills, you might want to approach the type of creditor with whom you feel the most comfortable. You might begin by targeting a specific credit score, people who were turned down for mortgages, or those who have credit card debt that’s at least 90 days in arrears.
If you start taking clients only to discover that you cannot help them, then you are wasting their time and yours – and you’re not making any money. That’s why you might target a specific population demographic, such as single mothers, those recovering from addiction, or victims of domestic violence.
#4. Be Willing to Keep Learning
When you are operating a credit repair business, then you become the product to sell. Your customers will need to feel like your expertise can help them out of a bothersome financial situation. That means you must continually learn about credit repair as the industry changes. Keep reading up on strategies, the history of this effort, and the tools that are available for you. When the focus is on education, then your company has more opportunities to thrive.
#5. Seek Ways to Delegate
It can be challenging for a small business owner to give up control over some of the tasks that must be completed every day. When your company starts to grow, you will also find that there are not enough hours in the day to complete all of the work by yourself. Learning how to delegate from an early stage can help you to manage scalability concerns while you also provide services to your clientele.
When you become tired, then things are going to start falling through the cracks more often. If people with different skill sets are providing services to your clients, then diversity can make your company stronger.
#6. Create an Affiliate Network
Affiliate partners are an incredible resource when you have a credit repair business. These companies can help you to scale your business quickly without reducing your strength. You will want to speak with car dealerships, mortgage brokers, and financial institutions that create lending packages. They want to see your efforts succeed because that outcome helps them to recover the money that is due to their accounts. Creating these relationships should be one of the top priorities that you have during the initial days of your planning process.
#7. Pricing Structures Matter
You are not resolving debt problems for people without charging them something for your services. You must create a thoughtful pricing structure that balances the need to settle that quickly while not making it so expensive that an individual feels like they could do the work by themselves. You can look at the pricing structures of your competitors for guidance, but that shouldn’t be the only figure you review. You must figure out what is called your Cost per Acquisition.
The time you spend managing accounts, the money it takes for your operations, and the cost of resources must all be considered when setting your price. Base your audit fees on this figure so that you can start with a profit. If you know your accountant charges $100 for this service, then charge the customer $125 instead of $95.
#8. Educate Your Partnerships
An active community network can be a fantastic asset for a credit repair business. It can also be one of your worst enemies if there isn’t an emphasis on education with these other businesses. Your connections are not strong when your partners don’t know how your services work or the types of people that you’re wanting to find. An easy way to counter this issue is to provide each person or business with an educational packet that talks about your company and how to obtain potential leads.
#9. Be Transparent
Before you start talking with your first client about managing their debt, you will want to have an operational system in place that is precise and transparent. These processes should include the entire intake procedure, including when you pull a credit report, how each client gets charged, and even how to join or remove oneself from your email marketing list. It takes some time to create these procedures initially, but they will also make your life a lot easier down the road because it adds another level of professionalism to those with an outside perspective.
#10. Help Your Clients Avoid You
When customers come to you with a need for help, the actual work you provide is somewhat minimal. When you set up a new client in your system, it takes about five minutes of actual work per month afterward to manage the account. When you take the opportunity to go the extra mile by educating people about how the credit system works and what they can do to help repair their scores, then you are creating lifestyle changes that can help them forever. Encouraging them to change spending habits that can help them to pay down the balance or stop applying for new financial products brings in a “wow” factor that can help your company start growing.
#11. Understand the Risks
The success rate of your business will depend on the clients that come through your door. There is no way to predict what their financial circumstances will be until you have an initial meeting with them. Since you can’t charge anything upfront in the United States (the FTC declared such a practice illegal), then it is up to you to produce immediate results. You can create a hands-on, highly profitable company in a short time, but you must understand the risks you face.
You might not have anyone come to you for help. There is also the possibility that you could speak with creditors and not get an expected resolution.
#12. Get Your Surety Bond
Some states require a credit repair agency to operate with a surety bond. The amount depends on your local jurisdiction, but most areas allow you to take clients with a $25,000 product in place. The cost of this “line of credit” varies from $400 to $1,500 based on your current credit scores. If you’re attempting to start this business without great credit yourself, the expense could be 33% of the amount you must secure each year.
If you live in California, Illinois, Indiana, Maryland, Ohio, Oklahoma, Texas, Virginia, or Washington state, then you will want to review the business licensing requirements for a credit repair company before you proceed with any incorporation documents.
#13. Incorporate Your Company
You do not want to operate a credit repair company as a sole proprietorship. Protecting your personal assets against client claims is imperative. That means you must form an LLC at the very least, and a corporation might not be a bad idea as your company grows. When you have a limited liability company structure in place, then your business assets are the only ones are disgruntled customer can pursue if you keep your personal bank accounts separate from your agency.
The cost of incorporation is minimal in most states, but you will need to file for a license in each jurisdiction you plan to offer services. There might be interstate compacts that can help you to save some money in this area, but it does help to have an attorney familiar with LLCs and corporations to help you get started.
#14. Make a Payment Gateway Available
Even though you cannot charge an upfront fee for your services, your business does have the opportunity to charge a milestone fee every time you complete tasks. If you send out several dispute letters on behalf of a customer, then that is a billable service. Most companies put together a service package with a monthly charge that outlines in writing every task you will perform. Make sure that you have a payment gateway in place to access these funds, even if it is only Square or PayPal. Trying to cash checks from people who already struggle with debt is a bad idea.
#15. Get Your Company Online
Use WordPress to create a website that your clients can visit to review your services or make payments. As your company grows, you can include subscription services, dashboards, or interactive apps that enable your customers to see the current status of their accounts. Information will always be one of your primary selling points. If your business is in a significant urban area, then your domain should employ current search engine optimization tactics so that your services can be at the top of a potential client’s search results.
#16. Invest in Credit Repair Software
The days of manually adjusting your books or working on client financials are long over. It might seem like a significant investment to pay $300 per month or more for credit repair software, but this technology also automates most of the tasks that you would need to complete by yourself. It will save you an immense amount of time every month, which means you can focus on signing more customers. The value is there from the beginning, especially if you choose a provider that uses a pay-per-seat pricing model.
#17. Know the Laws
There are local, state, and federal laws that you must follow if you begin a credit repair company. You will want to review the Credit Repair Organizations Act before completing your business plan to ensure that you’re comfortable following the outlined expectations. As part of this process, you might discover a requirement to register as a credit services organization.
#18. Consider a Franchise for Your Business
If you are ready to become your own boss, then franchising is an incredible opportunity to consider when looking at the credit repair industry. It will provide you with instant brand recognition, a trusted product, and corporate support. This combination of benefits allows you to make a name for yourself in your community faster than if you start from scratch. You’ll find a handful of companies that offer this opportunity, so take the time to review their fees and royalty structures to determine if you’re willing to make that kind of investment.
#19. Have a Complete Insurance Profile
A surety bond is not the only kind of insurance you’ll need with a credit repair company. There are several options to consider so that you can develop a policy that covers all of your unique risk factors. Speak with your agent to determine if you need property, errors and omissions, Worker’s Compensation, or an umbrella policy to protect your assets.
#20. Protect your IP
Intellectual property is the area of the law that protects your rights to original work. It covers everything from a book you’ve written to company identification marks. The goal of this structure is to encourage new ideas and expressions in each industry to promote higher levels of economic growth. If you come up with a catchy name or slogan, then consider protecting it through trademarks, copyrights, or the other forms of protections that exist.
#21. Pursue a Personal Certification
Although certifications are not always necessary in the credit repair industry, it is a way for you to set the services you provide apart from that of your competition. Several opportunities exist in the United States, such as becoming a Certified Credit Consultant, a CCRS™, or affiliation with the National Consumer Reporting Association. You may find opportunities with the International Association of Professional Debt Arbitrators can open additional doors for you.
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