Steps to Starting a Credit Repair Business

The Federal Trade Commission says honest credit repair takes time.

Credit repair may be good for you if you engage in ethical business practices. On the one hand, thousands of people with financial problems need help with their credit and are likely customers. On the other hand, respected agencies such as the Federal Trade Commission, Federal Reserve Board and Consumer Credit Counseling Service insist most credit repair agencies do more harm than good, and are seldom able to make good on big promises while collecting hundreds or thousands of dollars in fees.

Instructions

1. Learn what services credit repair agencies can legally offer. Get a copy of the Credit Repair Organizations Act from the Federal Trade Commission (FTC) website. The act was signed into law in 1996 to protect the public from unethical business practices and deceptive advertising by credit repair companies. According to the FTC, credit repair agencies can provide only a few ethical services, including helping people get free copies of their credit reports, talking to them about financial literacy, and writing letters on their behalf to the nationwide credit bureaus asking that incorrect information be removed from their credit reports.

2. Study the Credit Repair Organizations Act for more information about legally operating a credit repair agency, and visit the website of the FTC for additional information. For example, by law you must inform consumers--before charging them or signing them to a contract--that they have the right to repair their own credit. You must also tell the customer that he has the right to cancel any contract with you within three business days and for any reason. You must not make claims that you legally cannot make happen, such as promising to instantly erase judgments, liens or bankruptcy from a customer's credit reports.

3. Create a name and business structure for your new credit repair business after fully understanding the legal and ethical requirements as mandated by the FTC. Open your business and start advertising for customers.

References

• Federal Trade Commission: Credit Repair Organizations Act
• Federal Trade Commission: Credit Repair: How To Help Yourself