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How to Start a Credit Repair Business

in

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Cost of starting a credit repair business

Roughly $200

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Cost to obtain the required $10,000 bond:

Roughly $200

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Potential average profit

$20,000 monthly

Credit Repair Laws in Indiana

There are federal and state laws for Indiana. You should be aware of both.

Federal Laws

The Credit Repair Organizations Act (CROA) is a federal law passed in September 1996 that regulates organizations whose purpose is increasing consumer’s credit score through credit repair. One of the most important things the CROA did is make it illegal for credit repair organizations to make false claims. Don’t worry though, staying compliant is pretty easy after you get familiar with the law! This law is moderated and enforced by the Federal Trade Commission (FTC), so the FTC has the authority to close down any credit repair organizations that are operating outside the parameters of these laws (like fraudulent or illegal activities).

The main sections include mandates that:

  • You can’t misrepresent your services (no false claims about what you will do for the client and definitely no promise of working and then not doing the work).
  • You must provide a written contract between you and the client that the client signs.
  • Your clients have three days to cancel the contract.
  • You can’t charge until services are rendered (most companies will do some initial document processing and then charge the client for the work they have just done).
  • Consumers can sue and get refunded all money paid (plus legal fees and damages)  if the credit repair organization is found to have violated the CROA with that consumer.
  • State laws can’t change or render any of the CROA ineffective.

Simply put, these laws were put in place to protect people from credit repair companies using scammy business practices. As long as you’re not trying to be sketchy and scam people, you should be able to stay compliant easily!

To read the Credit Repair Organizations Act in full, visit the United States House of Representatives’ record of the act here.

State Laws

Indiana has laws that govern how to start (and run!) a credit repair business in Indiana. Here are the relevant regulations and Indiana laws governing credit repair businesses that you need to be aware of:

Indiana State Laws

IN ST 24-5-15-1


Chapter 15. Credit Services Organizations

Chapter 15. Credit Services Organizations

24-5-15-1 "Buyer" defined

 

Sec. 1. As used in this chapter, "buyer" means an individual who is solicited to purchase or who purchases the services of a credit services organization.

 

24-5-15-2 "Credit services organization" defined

Sec. 2. (a) As used in this chapter, "credit services organization" means a person that, with respect to the extension of credit by another person, sells, provides, performs, or represents that the person can or will sell, provide, or perform, in return for the payment of money or other valuable consideration, any of the following services:

(1) Improving a buyer's credit record, credit history, or credit rating.

(2) Obtaining an extension of credit for a buyer.

(3) Obtaining a delay or forbearance of a buyer's obligation under a mortgage.

(4) Providing advice or assistance to a buyer concerning the services described in subdivision (1), (2), or (3).

(b) The term "credit services organization" does not include any of the following:
(1) A person authorized to make loans or extensions of credit under state or federal laws that is subject to regulation and supervision under state or federal laws, or a lender approved by the United States Secretary of Housing and Urban Development for participation in a mortgage insurance program under the federal National Housing Act (12 U.S.C. 1701 et seq.).
(2) A bank or savings association or a subsidiary of a bank or savings association that has deposits or accounts that are eligible for insurance by the Federal Deposit Insurance Corporation.
(3) A credit union doing business in Indiana .
(4) A nonprofit organization exempt from taxation under Section 501(c)(3) of the Internal Revenue Code.
(5) A person licensed as a real estate broker under IC 25-34.1 if the person is acting within the course and scope of the person's license.
(6) A person admitted to the practice of law in Indiana if the person is acting within the course and scope of the person's practice as an attorney.
(7) A broker-dealer registered with the Securities and Exchange Commission or the Commodity Futures Trading Commission if the broker-dealer is acting within the course and scope of the broker-dealer's regulation.
(8) A consumer reporting agency (as defined in the Federal Fair Credit Reporting Act (15 U.S.C. 1681 et seq.)).

 

24-5-15-3 "Extension of credit" defined

Sec. 3. As used in this chapter, "extension of credit" means the right to:
(1) defer payment of debt offered or granted primarily for personal, family, or household purposes;
(2) incur debt and defer payment of the debt offered or granted primarily for personal, family, or household purposes; or
(3) delay or avoid foreclosure on a buyer's residence.

 

24-5-15-4 "Person" defined

Sec. 4. As used in this chapter, "person" means an individual, a corporation, a partnership, a joint venture, or any other entity.

 

24-5-15-5 Deceptive acts

Sec. 5. The following are deceptive acts:
(1) To charge or receive money or other valuable consideration before the complete performance of services that a credit services organization has agreed to perform for or on behalf of a consumer, unless the credit services organization has under section 8 of this chapter:
(A) obtained a surety bond issued by a surety company admitted to do business in Indiana ; or
(B) established an irrevocable letter of credit.
(2) To charge or receive money or other valuable consideration to refer a buyer to a retail seller that will or may extend credit to the buyer if the extension of credit is made upon substantially the same terms as those available to the general public.
(3) To make or to advise a buyer to make a statement with respect to the buyer's creditworthiness, credit standing, or credit capacity that is:
(A) false or misleading; or
(B) that should be known by the exercise of reasonable care to be false or misleading;
to a consumer reporting agency or to a person that has extended credit to the buyer or to whom the buyer is applying for an extension of credit.
(4) To make or use a false or misleading representation in an offer to sell or a sale of the services of a credit services organization, including:
(A) guaranteeing to "erase bad credit" or using words to that effect unless the representation clearly discloses that this can be done only if a person's credit history is inaccurate or obsolete;
(B) guaranteeing an extension of credit regardless of the buyer's previous credit history unless the representation clearly discloses the eligibility requirements for obtaining the extension of credit; or
(C) requiring a buyer to waive a right protected by a state or federal law.
(5) To take a power of attorney from a buyer for any purpose other than inspecting documents as provided by law.

 

24-5-15-6 Written statement provided by credit services organization

Sec. 6. Before executing a contract or agreement with a buyer or receiving money or other valuable consideration, a credit services organization must provide the buyer with a written statement that contains the following:
(1) A complete and detailed description of the services to be performed by the credit services organization for the buyer and the total cost of the services.
(2) A statement explaining the buyer's right to proceed against the bond or surety account required under section 8 of this chapter.
(3) The name and address of the:
(A) surety company that issued a bond; or
(B) depository and the trustee of a surety account and the account number of the surety account;
required under section 8 of this chapter.
(4) A complete and accurate statement of the buyer's right to review any file on the buyer maintained by a consumer reporting agency as provided under the Fair Credit Reporting Act (15 U.S.C. 1681 et seq.).
(5) A statement that the buyer's file is available for review:
(A) at no charge on request made to the consumer reporting agency within thirty (30) days after the date of receipt of a notice that credit has been denied; and
(B) for a minimal charge at any other time.
(6) A complete and accurate statement of the buyer's right to dispute the completeness or accuracy of an item contained in a file on the buyer maintained by a consumer reporting agency.
(7) A statement that accurate information cannot be permanently removed from the files of a consumer reporting agency.
(8) A complete and accurate statement indicating when consumer information becomes obsolete and when consumer reporting agencies are prevented from issuing reports containing obsolete information.
(9) A complete and accurate statement of the availability of nonprofit credit counseling services.

 

24-5-15-7 Contract between consumer and credit services organization; notice of cancellation form

Sec. 7. (a) A contract between a consumer and a credit services organization concerning the purchase of the services of the credit services organization must be in writing, be dated and signed by both the consumer and the credit services organization, and include all of the following:
(1) A statement in at least 10 point boldface type in immediate proximity to the space reserved for the signature of the buyer that reads:
"You, the buyer, may cancel this contract at any time before midnight of the third business day after the date of the transaction. See the attached notice of cancellation form for an explanation of this right.".
(2) The terms and conditions of payment, including the total amount of all payments to be made by the buyer to the credit services organization or to another person.
(3) A complete and detailed description of the services to be performed and the results to be achieved by the credit services organization for or on behalf of the buyer, including all guarantees and all promises of full or partial refunds and a list of the adverse information appearing on the consumer's credit report that the credit services organization expects to have modified and the estimated date by which each modification will occur.
(4) The principal business address of the credit services organization and the name and address of the credit services organization's agent in Indiana authorized to receive service of process.

(b) A contract shall be accompanied by two (2) copies of a form captioned "NOTICE OF CANCELLATION" attached to the contract and that contains the following statement in at least 10 point boldface type:

NOTICE OF CANCELLATION
You may cancel this contract, without any penalty or obligation, at any time
before midnight of the third business day after the date the contract is
signed. If you cancel, any payment made by you under this contract will be
returned within ten days following receipt by the seller of your cancellation
notice, or any other written notice, to _____________________________________
(name of seller)
________________________________________________________________
(address of seller) (place of business)
not later than midnight _______________________________________________________
(date)
"I hereby cancel this transaction". ___________________________________________
(date)
_____________________________________________________________
(buyer's signature)

(c) A credit services organization shall give a copy of the completed contract and all other documents required by the credit services organization to the buyer at the time the contract and the documents are signed.

 

24-5-15-8 Surety bond requirement

Sec. 8. (a) Before doing business in Indiana , a credit services organization must obtain a surety bond in the amount of twenty-five thousand dollars ($25,000), issued by a surety company authorized to do business in Indiana in favor of the state for the benefit of a person that is damaged by a violation of this chapter.

(b) The attorney general may waive the bonding requirement under subsection (a) and, instead of the bond, accept an irrevocable letter of credit for an equivalent amount issued in favor of the state for the benefit of a person that is damaged by a violation of this chapter.

 

24-5-15-9 Damage claims; alternative actions

Sec. 9. A person that is damaged by a credit services organization's violation of this chapter may:
(1) bring an action to recover the greater of two (2) times the amount of actual damages or one thousand dollars ($1,000) and attorney's fees; and
(2) bring an action against the bond or irrevocable letter of credit required under section 8 of this chapter to recover an amount equal to the person's actual damages.

 

24-5-15-10 Waiver of provisions

Sec. 10. A waiver of the provisions of this chapter by a buyer or credit services organization is void.

 

24-5-15-11 Violations; penalties; court jurisdiction

Sec. 11. A person who violates this chapter commits a deceptive act that is actionable by the attorney general under IC 24-5-0.5-4 and is subject to the penalties and remedies available to the attorney general under IC 24-5-0.5. An action by the attorney general for violations of this chapter may be brought in the circuit or superior court of Marion County .

Current through the 2007 Public Laws approved and effective through April 27, 2007.

 


END OF DOCUMENT

For additional information about starting a credit repair company in [STATE] contact your state or an attorney.

Requirements for Surety Bond for Credit Repair Business in Indiana

A few states do require a surety bond. (At the time of this writing most states do not require a bond.) If your state does require a bond, you are not required to secure your bond from your same state.

Bonds are a minimal expense (usually under a few hundred dollars) because you order them from a bond service and pay only a small fraction of the bond yourself. A Credit Repair Services Organization Bond protects you. For more information about Credit Repair Services Organization Bonds, contact BondsExpress.

If you get your bond through a bonds service, the amount you pay will generally be 2-3% of the total bond amount (this cost varies depending upon your credit).

Statute of Limitation on Debt in Indiana

Indiana credit repair businesses must be knowledgeable about the statute of limitation governing debt in Indiana because this will guide your business decisions and enable you to best help your clients. The statue of limitations essentially limits the time that a creditor can legally sue a consumer for payments for a debt. Statutes of Limitation (SOL) do vary by state and debt type. In general, it is usually between 3 to 6 years, but sometimes longer.

To learn more about the statute of limitation laws for your state, click here.

Indiana Credit Repair License

We’re not aware of a state requirement for a “credit repair license” to operate a credit repair business in Indiana. However, many find getting training and a certification useful because it:

  • Conveys competence to prospective clients
  • Helps gain the trust of clients
  • Arms you with the training and tools you need to help clients and build a recurring revenue model

The American Credit Repair Academy http://try.creditrepaircloud.com/academy/; offers training, resources, and credit repair certification

Market Potential for a Indiana Credit Repair Business

Market Temperature:

0 1 2 3 4 5 6 7 8 9 10
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Percentage Of Credit Reports That Have Errors

79%

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Total Number of People Living In Indiana

6.63 Million

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Average Debt on Credit Report

$5,700

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Percent of Population With Credit Scores Below 700

44.3%

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Percent of home buyers getting a mortgage for their home purchase

88%

How to Profit with a Credit Repair Business in Indiana

1. Start

  • Get a powerful CRM that handles your business for you
  • Train and learn about the business
  • Create a professional website
  • Market your business to new clients

2. Run

Use software to automate the tasks of a credit repair business in Indiana:

  • Import clients’ credit reports
  • Generate dispute letters in seconds
  • Manage recurring payments and affiliate programs

3. Grow

  • Capture new lead and close more deals
  • Use the data you gather to scale your business
  • Automate more functions: signature capture, payment integrations, meeting scheduling, and more

All of this is available with Credit Repair Cloud

TRY IT FREE!

Frequently asked questions

How does the BT-1 affect my Indiana credit repair business?
The BT-1 is the Indiana Department of Revenue online Business Tax Application and it must be completed by any entity authorized to do business in Indiana. Your credit repair company can use the BT-1 checklist to ensure you have everything together for the application before getting started.
When can I start operating my credit repair business in Indiana?

You should check that you’ve completed the necessary local regulations, in addition to the state and federal regulations listed above, before opening your doors to credit repair clients. Foreign corporations (those registered and formed outside of the state) should file a Certificate of Authority from the Secretary of State to operate your business in Indiana. In addition, the Indiana Small Business Development Center provides workshops designed to help new business owners start profitable businesses in Indiana.

Do I need a business license to operate my credit repair company in Indiana?
No, you do not need a business license to operate a credit repair company, or any company, in Indiana per the state’s business information website.

What Other Credit Repair Businesses Say

ROB Y

Laredo, TX

We have a tax preparation business. My partner and I decided to branch out into credit repair. Credit Repair Cloud now helps us to build our customer base for the tax business. It is a wonderful tool for lead generation. Credit-Aid provides superior customer service. You have gained a customer for life!
testimonials-bob.jpg

MANAL MASSIS

Houston, TX

I love your system! This was the best investment ever and the customer service with Credit Repair Cloud is excellent. You have a very good team. I wish companies were just like you. I've tried everybody out there and your system is very powerful. Thank you for helping me. God bless you!
MANAL MASSIS

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How to Quickly Start a Profitable Credit Repair Business

MINUTESSECONDS
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Secret 1

How Credit Repair is the LOWEST COST & MOST PROFITABLE business you can launch. . .

Secret 2

How our step-by-step “Dispute Process Blueprint” gives you EASY Credit Repair Results without being a credit expert. . .

Secret 3

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Legal disclaimer: Our software products and resources offer credit information, not legal advice. We make every effort to ensure the accuracy of the information and to clearly explain your options. However, we do not provide legal advice (i.e.; the application of the law to your individual circumstances). For legal advice, please consult an attorney, your city or your state.