One of the challenges with growing up in a society where talk of money is taboo is that many people come of age without a concept of managing a credit score. While the next generation has access to valuable online information, today’s adult population learned about debt and credit management after it was too late. As a result, many people have a goal to improve their financial literacy and credit score.
Credit repair businesses offer services to help improve consumer credit scores by having negative items removed from credit reports. Here are the important things you need to remember about credit repair businesses before using them or starting one yourself.
They’re Closely Regulated
Credit repair businesses are regulated by the Credit Repair Organizations Act (CROA), which is enforced by the US Federal Trade Commission (FTC). The intention of this regulation is to prevent fraudulent behavior under the guise of offering credit repair services providing consumer protection.
If you’re someone interested in using these services, take the time to read up on the CROA to ensure the provider you’re evaluating is compliant with these regulations. If they aren’t, report them and find someone who is. If you’re hoping to start a credit repair business from home, it’s important to understand the legalities and expectations in your state.
They Have No Educational Requirements
Anyone can start a credit repair business as long as they follow the local regulations around securing a surety bond, getting licensing, etc. There’s no special background education or certification required. Many of the people who own small credit repair businesses are average consumers who have navigated the process of repairing their credit and feel passionate about sharing this service.
They’re Not Quick Fixes
No matter what you’re talking about— health, home repairs, relationships— a few weeks or months of effort isn’t going to undo years of damage. The same applies to repairing your credit.
A credit repair service can help improve your credit score by disputing negative items and negotiating on your behalf. Even so, it’s a long process that could take months to yield results— even with the best credit repair businesses. Additionally, using these services doesn’t repair how you manage money or prevent you from making the same mistakes again.
In addition to using a credit repair service, it’s worth working with a financial advisor or coaching service to help you put healthy financial habits in place so you can maintain the good credit score you’re working toward.
There’s No Secret Sauce
Credit repair businesses don’t have any secret connections or techniques to improve someone’s credit score. They follow a set of strategic steps that falls within the legal framework of how creditors work; it’s something everyone can do for themselves.
So what’s the value in hiring a credit repair business? The steps that anyone can navigate are tedious, time-consuming, and frustrating. They require attention to detail and continuous effort. Many credit repair services use high-quality software to help navigate the process. Furthermore, creditors don’t make it easy to dispute items, and making mistakes could delay your progress by months (or indefinitely).
Hiring a credit repair service is like hiring someone to change your oil. It’s something you could do yourself with time, patience, and learning, but it’s likely not worth the effort when someone else could do it more efficiently.
They Take Time and Effort
Many aspiring entrepreneurs look at credit repair as a great business opportunity— and it is! However, like any successful business, it takes time, effort, and dedication to make it work. Starting a credit repair business isn’t a get-rich-quick scheme; you’ll need to dedicate time to marketing, client management, and doing the work.
Whether you’re considering working with a credit repair service or exploring this business opportunity, take the time to reflect on the notes above and do your research.