If you’re looking to begin an effective credit repair business, it is important to know the rules and regulations to ensure that you are in compliance. Like any other business, there are Federal, and State laws and each state has its own rules.
Certain states have rules for bonding, licensing, or registering as a credit-service organization, and others have requirements on the amount you can be able to charge consumers and when you can make them pay, and many of them require the contracts you sign with your customers to make clear what they are. Knowing the rules isn’t difficult but crucial, so you can navigate safely and make the right decisions.
A credit repair service company is a company that helps customers identify any mistakes in their credit reports and assists in disputing inaccurate information with credit report agencies. They can provide these services in person, on the internet, or by telephone.
Its goal is to protect credit cards, loans for personal use, and mortgages on homes. In the end, credit repair helps individuals, as well as small businesses, manage their credit issues to improve their credit rating.
The statistics indicate that in the United States of America, there are around 130,000 licensed and registered credit repair firms that employ around 135,701, and the business generates $6 billion per year. The sector has seen an annual decline in revenue of 5.2 percent annually.
However, with the help of technology and tools like Google Doc, credit repair firms can streamline their processes and improve their efficiency, potentially reversing the decline in revenue.
Do I need to have a license?
In order to begin an enterprise in credit repair, one of the most basic prerequisites you must be able to meet is an occupational license. It is necessary to apply to the Florida Department of Business and Professional Regulation. It is a state-wide obligation, and the cost will be $15 to get a 3-year license.
Trust Account
Your credit repair company should establish an account with a trusted company in a federally insured bank or savings and lending association located in Florida.
Surety bonds
Florida law requires every credit repair service to get an assurance bond of $10,000 from a surety firm licensed to conduct trade within Florida pursuant to Florida Statute 817.7005. The process of obtaining a surety bond will generally cost between one and ten percent of your credit as the business owner.
You can get surety bonds from several insurance firms; therefore, it is crucial to evaluate their rates to discover the most affordable price.
Credit Repair Contracts
When you offer your customers any repair service, it is required that you provide them in writing credit Repair Contracts. According to Florida law, the contracts must include the following:
- In a bolded statement next to the customer’s signature, the consumer is informed of their right to cancel.
- The payment terms and conditions include specific amounts for payment.
- Describe the services your company offers, including assurances and refund guarantees.
- The primary business address of your company, along with the name of your agent who is authorized to accept the service of process.
- A “Notice of Cancellation” form is included with the contract.
Laws for credit repair companies are subject to the same laws as other businesses. However, some additional laws specifically for credit repair companies must be adhered to protect consumers from fraudulent or deceptive practices.
Do I have to comply with any laws?
Credit repair companies are tightly controlled. Every credit repair service company must comply with the Credit Repair Organization Act (CROA), which can be found in Title IV of the Consumer Credit Protection Act (CCPA). Your company must also be in compliance with the regulations of the Florida Credit Service Organizations Act.
Does my credit repair business need to be certified?
Although it’s not a requirement of the law, anyone who wants to begin an enterprise in credit repair should be certified. There are many online courses to increase the credibility of your credit repair service.
In addition, you can gain credibility for your company by applying for accreditation with the Better Business Bureau once your company has met the requirements for certification. Certain States require that credit repair firms be registered with the state as Credit Service Organizations, but this is not the case in Florida.