You’re in the right place if you’re thinking about learning how to start a credit repair business. This process can be difficult as getting started in any other type of business, but what makes credit repair a tough niche is always needing to guarantee the best results.
Also, competitors are many in the industry as a credit repair business is something that can be run online or offline. Based on this, you will also need to choose how you will work around this entrepreneurship.
Regardless of your choice, the process will be quite similar since it is necessary to meet legal procedures if you want to register your business. On the other hand, if you’re considering starting in it by just offering your independent services, you don’t need to pay attention to the legal process.
However, we will be going over every step related to a complex yet complete credit repair business and how to start it.
Follow All Credit Repair Laws
The laws regarding credit repair will vary depending on where you live. Some states, such as Alabama, Alaska, and Wyoming, have no regulations governing credit repair businesses.
While most states have regulations that vary from one state to the next, it is not difficult to comply with them all. In some cases, like Texas, credit repair companies must be licensed attorneys or non-profits to be allowed to conduct business in the state.
Before you start credit repair online or offline, be sure you are familiar with the laws in each state.
Now, while laws and requirements may vary from one state to the next, there are some federal conditions you need to be aware of if you want to start this business.
- The Credit Repair Organizations Act
This entity should be the first because it impacts every credit repair business, regardless of the type of business plan or where you live.
The FTC created this act in the mid-1990s in an effort to stop credit repair businesses from exploiting their clients. These laws are also subject to the Commission’s power to punish and even close down companies. You might be wondering what these laws are. Here are the main ones:
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- It is forbidden to mislead clients about the services you offer. This applies to both the services that you provide and the guarantees you give.
- Your client must sign a written contract that allows them to cancel their order within three days. Your client must sign this contract before work begins.
- It is against the law to charge any services upfront.
- Purchase a credit-repair surety bond.
To protect your client from potential damages, you will need to get a surety bond. The bond is easy to obtain in most states and costs $200-$300.
It is easy to apply, but you will need your personal and company credit score, any financial assets, and bankruptcy, as well as your age and the amount of the bond that will be paid once approval has been granted.
Approval can usually be done in a matter of hours, and in certain cases, it may take as little as 24 hours.
- Credit repair licensing requirement.
A new business might need to apply for a license permit in order to open within the city limits. Credit repair businesses are able to avoid this requirement in 99.9% of states. Idaho is the only exception.
- Credit repair companies’ registration stipulation.
Twenty-five states have current registration requirements. Each state is different in what they need and wants. To find out what your state requires, call or visit your Department of Revenue to do some research.
Before you start credit repair, make sure your plan is in line with these requirements.
Plan Your Business
For entrepreneurs to succeed, a clear business plan is crucial. This will allow you to map out your business’s details and uncover some hidden opportunities. Here are some important points to remember:
- What are the ongoing and startup costs?
- Who are your target markets?
- What can you charge customers for?
- How will you name your company?
Besides these, you should also worry about approaching questions like how much it costs to open a credit repair agency. Fortunately, we can help you answer this and more questions.
First, the startup credit repair agency cost is very low, with an average of $10,000. You don’t need an office space as most of your work is done online. You should have a computer, monitor, dedicated phone line and internet in your home office.
Any business that accepts credit and debit card payments must have a merchant account. However, most banks are not willing to take on the risk associated with credit repair agencies. Do your research thoroughly and find a credit repair merchant that can help you with your business needs.
Although not necessary, credit repair software investment is recommended. It represents your largest out-of-pocket expense. Many entrepreneurs are tempted to skip this expense as software costs can range from $179 to $900 per month.
Industry experts advise against this, but there has been a 400% increase in revenue in just over one year.
A credit repair franchise is a great option for business owners who want the support and expertise of established companies. The franchise fees are between $9,500 and $15,000 and include all the tools necessary to get started.
But what about other considerations for your plan? You can include these questions and details:
- What are the ongoing costs for a Credit Repair Agency?
Your agency’s ongoing expenses will be comparable to startup costs. Your agency’s overhead costs should be included in your budget.
This includes credit repair software fees, payroll, insurance, surety bond, as well as other expenses. Entrepreneurs who are looking to achieve long-term growth and success should include education in their monthly expenses budget.
- Who is the target market for your business?
One might think that your target market would include anyone with a bad credit history. Research shows that most consumers aged 24 to 65 have a good credit score and aren’t concerned about fixing it.
Marketing efforts should be directed at consumers older than 25 years old or who have been declined for a loan in the past. So don’t focus on the usual bad credit perspective but rather those who are more likely to use your services.
- What price can customers pay?
Research competitor pricing and fees structures when developing your business plan. Also, consider your cost per acquisition.
While established companies charge $90 to $125 per month, others charge a fee for every dispute they resolve. Industry leaders encourage new agencies not to be rigid and allow them to adjust their pricing when necessary.
- How can your business be more profitable?
Agent owners who want to maximize their profits must have a strong marketing strategy. This will include hiring additional repair professionals as the company grows.
- What name will you give your business?
It is important to choose the right name. If you are alone and will offer services on your own, try your name instead of anything else.
If you are going for the more traditional option, go for a simple name to remember and try to include your personal brand in it.
Finally, this business plan can take a bit more time since you need to streamline it as well.
Every client that you serve should have the same experience. It should be professional, predictable, and effective. Thus, it is necessary to keep this in mind in your plan but also as considerations throughout the years to bring success your way:
- Listen to your client and give a time frame.
- Check your client’s credit score.
- Provide consultation for free based on the report.
- Expectations should be based on the client’s needs and the results of the consultation.
- Complete the credit repair audit.
- Plan with a list of the most critical to the most overlooked fixes.
- Use the best credit repairs to implement the plan.
- Support and recommendations after the plan have ended.
This is more about how you will work with your clients and ensure that you are following the expected steps for your goal throughout the process.
Now, to summarize everything, this plan explains how and why the owner wants to launch the company.
The whole business plan outlines startup costs, such as software, inventory, or assets. Make sure to be specific about your business goals.
Also, describe how you plan on making money and scaling it. You can see your progress towards your goals by measuring them. To measure your success, look at the key performance indicator (KPI). You can then see if your goals are achievable and if you are setting yourself up for success.
Software for Business Credit Repair Integration
This is crucial to your success in your business, and even when it can be expensive, as mentioned before, you will need it.
To begin with, you’ll be more productive if you can avoid the tedious tasks since software automates many of the repetitive tasks involved in credit repair. This allows you to concentrate on the core task of helping clients, sending out dispute letters, and providing customer service.
The software handles many tasks, which will allow you to grow your client base and your business. You can also manage the bill so that you can keep track of everything in your business using one dashboard.
Register Your Credit Repair Business
You can’t open a bank account for your business without being registered. Thus, you won’t be able to prove your company’s worth, and you won’t be operating legally.
Credit repair is a high-risk business that involves many variables and unknowns. To ensure you are going in the right way, take the time to consult a tax professional to help you choose the best business structure.
We would usually suggest going for the LLC structure unless you are unable to meet the requirements.
If you are up for the challenge of taking all responsibility as the only worker in the company, a sole proprietorship isn’t a bad option but also the only one in most cases.
Find Your Financing Source
Credit repair businesses are not well-received by banks due to the risky nature that comes with them. However, a few financing options include:
- Wells Fargo.
- Schools First Credit Union.
- Bank of America.
- BBVA.
- Regions Bank.
- Navy Federal Credit Union.
Can help you. In addition, private lenders or specific institutions are also open to helping you in the investment.
Angel investors are also popular among the options. We highly recommend giving them a try unless you have the money yourself or other legal institutions are appealing in their offers and terms.
Choose the Pricing Model
Credit repair companies use a range of pricing models because the services aren’t a time-bound process.
Among companies in the niche, subscription-based pricing is the most popular. However, flat fees are considered because consumers pay a fixed price, regardless of how long it takes. Thus, you can consider these the most common options:
- Subscription-based.
- Flat fee.
- Pay per deletion.
- Only Guidance.
The client will be charged on a recurring basis depending on the billing cycle. For example, clients may be charged every 35 days. The company may also charge the initial work fee (also known as the review fee or the setup fee).
The Credit Repair Organizations Act prohibits advance payments. Providers must complete some work at the beginning. Usually, they will obtain and evaluate the client’s reports.
Flat fees are a good option for most startups or general credit repair companies. A small fee may be charged for each deletion, for example, $35. It is often combined with a first-time work fee.
Learn and Grow
You will be able to provide the best value for your clients if you learn as much as possible. Hence, you should continue to grow and learn.
While many clients may find the process confusing, it is your responsibility to guide them. You will be able to assist your clients with expert-level strategies and better understand the credit history. This is one of the most effective ways to accomplish this:
- Online training sessions.
- Participate in trade shows.
- Refer to other credit repair business owners.
- Subscribe to industry blogs.
While staying within your industry can give you great ways to improve your business, expanding is also a good idea. Learn more about marketing training and how it can help you build a website, effective paid search programs, landing pages, and other skills.
You can also attend an affiliate conference to establish meaningful relationships with people who will refer your business to them. You might also want to listen to the opinions of your local council about the current state of your area and make an effort to help those who live nearby.
Do not underestimate the importance of being a successful business owner. Examine your competitors and find out where they advertise and how to get clients.
Advertising Your Credit Repair Business
Digital marketing is now the king and requires an omnichannel presence.
Different platforms can be used to engage, from Instagram to Facebook. You can promote with helpful content or paid ads. Every system is unique, so you must adapt your information and ads to fit each environment.
In the case of using Instagram, create a business account to make the most of all the tools available. You should first post quality content using relevant hashtags.
In addition, Instagram stories give potential clients a glimpse behind the scenes so that they can feel a connection with your company. Reels and IGTV are thirdly great tools to help you reach a lot of potential clients.
Post testimonials and describe your company’s achievements. Offer free training. A business should publish at least one blog post per day and up to three stories each day. You could also pay to get your posts promoted and exposed in a lazy manner. This applies to any social media platform you use.
Join Facebook groups devoted to credit repair. Service providers often create these communities, so don’t promote your company. Instead, offer useful advice and answer members’ questions.
This will encourage them to look at your profile and include your website. Find out as much information as you can about automated promotion channels.
Now, social media isn’t the only option available, and if we have to mention a few strategies, we need to start with something simple yet crucial: your target audience.
The target audience will be the potential clients you can aim for and who are worth your time and money in advertising efforts.
Credit repair companies often target people who have been turned down for loans. This person has good reasons to use credit repair tips and services. They know that loan approval is dependent on a higher credit score after all.
Knowing whom you should market to is also key to knowing who doesn’t need your services.
Bad credit is less likely in people under 24 than those who are older or in their 30s. Most people over 65 have either good credit or don’t care about fixing bad credit. It is best to target an audience who has a credit history but is young enough to be motivated to correct discrepancies.
Always think like your target market when you plan how to start a credit repair business. Understanding your client personas will help you understand what your client wants before they do.
A target market analysis can help you identify your ideal customer. After you have helped several clients successfully, encourage them to share their experience with others and even send referrals. Your company could use word of mouth to convert clients.
With this in mind, these are some strategies you should follow to ensure the best results and clients for your company:
- Create Your Website.
A website is vital, even when people feel that social media is better. The reason? It is essential for credibility.
Several WordPress templates are available, and you can choose from them. You don’t have to spend a lot of money on a fancy design, or maybe you can bet for free options like Wix while you can afford WordPress in the future.
If a company has a simple website, it can be successful. What matters is that it should include testimonials from customers as well as educational resources.
- Social Media Ads.
These ads will increase your credibility and help you get more quality clients.
The best part about relying on this is that modern systems make it easy to automate and
save time promoting your business in this way.
Considerations to Keep in Mind
You must be able to accept digital payments in order to run a business. When dealing with companies like yours, most people prefer to use a debit or credit card.
However, without a merchant account, you won’t be able to offer this service to your customers. This can be a problem for your credit repair business.
You won’t be able to open a merchant account at a bank tier 1 in your search for online credit card processing. These businesses sell sensitive information and use recurring billing.
Credit repair services pose a greater risk to banks. These banks will reject your application for these reasons and leave your business without luck. Next, you will need to find a credit recovery merchant services processor who understands your industry so that they can support you.
Each processor maintains a list with which banks they do business. Some processors prefer to work with low-risk industries, while others are more interested in high-risk sectors.
You will want to ensure that the credit card processing company you choose has clients in high-risk credit repair sectors. You will be able to run your business with no worries about your bank closing your credit card repair virtual payment terminal.
With the right tips and tools, starting a credit repair company is easy.
Your ability to help people improve their credit scores and live a better life will allow you to reach a wide range of people. A higher credit score means that you will be able to enjoy greater financial freedom.
The Local Lead Generation Process for Your Credit Repair Business
All right! So, everything is about building properties and generating leads. But how does the process actually take place? Are there other steps I need to know?
The steps I mention below are what students from our local lead generation program follow to generate leads for businesses like yourself. So I’ll help you see what we do. And how if you join our program, you can simply generate leads for your own business (unless you want to start a side hustle and build a laptop lifestyle business).
Essentially, our lead generation can be divided into four steps:
The first is prospecting. You need to take the time to do market research on a niche (industry) and determine how many phone-driven businesses are there.
Keep in mind that this is local research as you need to know how many companies need leads. For example, you may search for “plumbing services Youngstown OH.”
You will find dozens or even hundreds of businesses trying to get themselves in front of the customers by ranking on Map Listings, organic results, and even Ad.
The second step, building. When you find a niche (plumbing, tree services, a software company, real estate…), you will need to start building your digital properties. You don’t need to be an expert in HTML or coding. It can be easy with the right tools.
The third step is now taking time to rank your lead gen website. With the site done, you need to work on SEO strategies and start dominating those Google search results. If you’re new to SEO, it stands for Search Engine Optimization.
To keep it simple, it consists of the entire process of growing a company’s visibility on search engines like Google and generating organic traffic. And remember this, local lead generation is part of the strategies.
Moving on to step four, once you rank the site, you will start getting your ROI and profits. You only need to rent it out to a local business interested in the leads the site generates. You can offer a couple of free leads to their move on with the actual pay per lead.
To review steps 1-4 above, I described it to a normal student who is building a lead gen business to help local service providers generate more calls. But replace the student with you as the business owner. And replace sending the leads to a business to simply siphoning the leads to your personal business.
By the way, fun fact, about 20% of our students in our local lead gen program are actually business owners who went through the program. And they use the skillsets we teach to generate leads for their own business.
An Example of Lead Generation: Home Advisor
You must be thinking, “if lead generation sounds so good so far, how come I haven’t seen any company?” That’s the thing; there are many out there. You just don’t know they are dedicated to it.
HomeAdvisor is one of the best examples you can find on the Internet as it is a top lead generation company that has spent millions building its brand but also earned even more zeros for this same reason.
They started small as everyone else but invested in building their brand awareness to make people who are looking for home services go to their website and find what they need. They are over 75% of people’s first choice when they need those services.
If you don’t get HomeAdvisor that much or need a refresh, users need to submit their information to request a service and get a professional or expert who can provide it.
HomeAdvisor’s job is to share your information, which makes you a lead, with local companies so they can contact you and offer the service you’re requesting. For sharing this lead information, HomeAdvisor gets paid by the companies. This happens for every single lead they send to multiple businesses.
Business owners who don’t have marketing skills or don’t even know how to have any online presence will always rely on those pages to list their services. They will save time and effort, but companies like HomeAdvisor can make them spend lots of money as leads aren’t exclusive (one lead is sent to multiple companies after all).
Using Facebook Ads aka Paid Ad Platforms: Do They Generate Leads?
They DO generate leads. If not, no one would use them.
However, you need to remember two facts:
- Paid ads or platforms can be expensive.
- They don’t generate “natural” leads.
Whenever someone sees or clicks in one of those ads, over 80% of them did it by accident or are trying to close/report it.
Why? Because they aren’t looking for those services. At least not at the moment.
What those ads do instead is interrupt their time on the platforms. Users aren’t there to find companies or businesses unless they are searching for a specific company’s user, and for that, there’s a search bar. This is why it is hard to convert them to actual customers who will show interest in the companies’ services. Also, you’re limited by a budget.
When using lead generation, everything is organic. You aren’t forcing others to pay attention to your business but rather being there when they need you. This is why Google’s organic traffic will always beat paid ads, and the reason companies continue investing in it, which is a lot cheaper as well.
What Is Local SEO?
Don’t worry… I didn’t get it at first either. Following the short explanation, local SEO focuses on scaling businesses’ visibility on search engines. However, this is only for those who serve their communities face-to-face.
What does this mean?
Experts and professionals like painters, plumbers, and dentists (but not only them) offer their services to their local customers. Why? Because they can’t deliver them unless they are located in the same area of their customers.
To make sure those businesses get more leads, you need to rank them locally by claiming the business listing on Google to place them on Map Listings. Local SEO also involves online reviews, citation management, and how you manage your entire online presence in the local area.
If you are going to bet on lead gen, you need to adapt yourself to today’s world: The Internet.
Keep in mind that although traditional channels and methods like billboards, warm calls, and pamphlets still work, they aren’t part of your tools. Whenever someone needs a service, they go to Google and search for it.
“Dentist in Miami” or “plumbing services in Orlando,” etc. And you can keep coming up with services or professionals people need and look for. Thus, you need to make sure you’re using Google to get the companies in front of their clients.
Users will always click on the first search results (those near the top), and many of them will be either Ad links (people paid to place their websites there), Map Listing, and then you get websites. Almost all of them are your goal and where you should always aim to place yourself.
Can My Credit Repair Business Utilize a Local Lead Generation Strategy?
If you want customers, you better know you need it. Following the previous explanation, lead gen is all about placing businesses in front of their customers, choosing them over their competitors.
Put it simply – it’s all about closing deals and having clients for those companies to make money. The main difference with the usual methods companies use for this is how lead generation approaches different channels to get them in the right place of the market to get customers.
Those channels are all focused on the Internet as most people are searching for products but also services across the net. The issue is that the Internet is way too broad, and businesses don’t know how to place themselves. They usually try, but they get one common result: losing money and time.
How Powerful Are Organic Credit Repair Leads from Google?
For companies looking for customers, it’s everything. For you? Pretty much the same. When you build a business with digital properties, you get to make thousands of dollars a month.
This isn’t a “get started today and get rich tomorrow” thing, but it is HIGHLY scalable, and ROI + positive results are guaranteed. Learning a fairly decent and very needed set of skills to create your digital properties and start ranking them on Google is required.
I have invested in several online businesses over the years, and if there’s something uncertain, whether you will get your ROI or not, even more than the actual profit.
However, this business moved my earnings from five figures a year to a month in ONLY passive income while sitting comfortably at home.
On my laptop. Anywhere. Anytime.
You can look at one of the first sites I built back in 2016, and it continues making me over $1.000+ every month. The best part is that I don’t need to touch it or the rest I’ve built over the years, just like this digital property.
What Makes Lead Generation SO Alluring?
Here it goes: you can work from home.
The main issue with regular business opportunities is how much you need to invest in staff, equipment, or rent to have a place to sell your products or offer your services.
We all know the hassles of traditional businesses that involve regular expenses, which are extremely high. Can you afford it? I don’t think so, and even if you can, is it worth it? Now, it isn’t only about the money. You also need to put in a lot of work, and it isn’t only during the first couple of months or years. Usually, it is as long as you continue running it.
You can save yourself those headaches and bone-breaking tasks and expenses with lead gen since it is more about generating leads with digital channels—mainly websites.
Websites can be VERY cheap to build, and with many tools online, you get to do it in a couple of hours instead of days. Any virtual or digital business is scalable and won’t need constant maintenance.
So, let’s summarize this:
- You save money in regular expenses with traditional and most online businesses as what you need is yourself and digital properties (websites).
- You can bet on passive income.
- There’s no need to hire more people to get started.
- You can generate leads in multiple industries, which allows you to work on any niche you want.
How Can I Get Started in the Local Lead Generation Program?
Anyone can start and learn. That’s the beauty of this business model. I knew nothing about SEO, Map Listing, and everything I’ve mentioned so far. It is all about learning the skills, gaining experience, and deciding to take the step.
Remember that this business model will never get old as business owners are always looking for leads. They need to do business and scale their companies. Why not do the same while helping others and still making money?
You can start with this local lead generation course highly recommended for anyone wanting to grow in the business. It is a close training that will take you through each step and make sure you are able to get your ROI, profits and take control of your life.
You will be added to an incredible lead generation family ready to help you 24/7 when asking questions on the group. Anyone is welcome who’s willing to put in the work. Click here to watch the lead gen webinar.