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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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Bond Requirements

$0 - A bond is not required in this state

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Potential average profit

$20,000 monthly

Credit Repair Laws in Michigan

There are federal and state laws for Michigan. 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

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

Michigan State Laws

M.C.L.A. CH. 445, Prec. 445.1812

P.A.1994, NO. 160, IMD. EFF. JUNE 13, 1994

AN ACT to prohibit certain methods, acts, and practices of credit services organizations; to prescribe remedies and penalties; and to repeal certain acts and parts of acts.

M.C.L.A. 445.1822

Michigan Compiled Laws Annotated Currentness 
Chapter 445. Trade and Commerce 
Credit Services Protection Act (Refs & Annos) 
445.1822. Definitions 

Sec. 2. As used in this act:

(a) "Buyer" means a person who is solicited to purchase or who purchases the services of a credit services organization.

(b) "Credit services organization" means, except as otherwise provided in subdivision (c), a person who, in return for consideration, attempts to sell, provide, or perform 1 or more of the following:

(i) The improvement of a person's credit record, history, or rating.

(ii) The obtainment of an extension of credit.

(iii) Advice or assistance regarding the improvement or repair of a person's credit record, history, or rating.

(iv) Advice or assistance regarding the obtainment of an extension of credit.

(v) Advice or assistance regarding foreclosure of a real estate mortgage.

(vi) Serve as an intermediate between a debtor and a creditor on behalf of the debtor regarding credit that was extended prior to any agreement to have the credit services organization serve as an intermediate.

(c) Credit services organization does not include any of the following:

(i) A person who is licensed in this state or otherwise authorized to make loans or extend credit under any state statute while engaged in the regular course of business under that state statute, other than Act No. 326 of the Public Acts of 1966, being sections 438.31 to 438.33 of the Michigan Compiled Laws.

(ii) A federal or state chartered bank, credit union, savings bank, or savings and loan institution, an entity of the federally chartered farm credit system, or any solely owned subsidiary thereof.

(iii) A person licensed under the occupational code, Act No. 299 of the Public Acts of 1980, being sections 339.101 to 339.2721 of the Michigan Compiled Laws, when engaged in the regular course of business.

(iv) A person licensed to practice law in this state if the person renders services within the course of that person's practice as an attorney and does not engage in the business of a credit services organization on a regular and continuing basis.

(v) A judicial officer or other person acting under court order.

(vi) A consumer reporting agency, as defined in section 603 of the fair credit reporting act, title VI of the consumer credit protection act, Public Law 90- 321, 15 U.S.C. 1681a, while engaged in the regular course of the credit reporting business.

(vii) A debt management business licensed under the debt management act, Act No. 148 of the Public Acts of 1975, being sections 451.411 to 451.437 of the Michigan Compiled Laws, while engaged in the regular course of business under the debt management act.

(viii) An investment adviser or broker-dealer registered under the uniform securities act, Act No. 265 of the Public Acts of 1964, being sections 451.501 to 451.818 of the Michigan Compiled Laws.

(ix) A nonprofit corporation that is exempt from taxation under section 501c(3) of the United States internal revenue code, title 26 U.S.C. 501c(3).

(x) A finance subsidiary of a manufacturing corporation.

(d) "Extension of credit" means the right to defer payment of debt or to incur debt.

(e) "Person" means an individual, partnership, corporation, association, or other legal entity.

CREDIT(S)

P.A.1994, No. 160, � 2, Imd. Eff. June 13, 1994.

M.C.L.A. 445.1823

Michigan Compiled Laws Annotated Currentness 
Chapter 445. Trade and Commerce 
Credit Services Protection Act (Refs & Annos) 
445.1823. Credit services organizations; prohibited activities 

Sec. 3. A credit services organization, a salesperson, agent, or representative of a credit services organization, or an independent contractor who sells or attempts to sell the services of a credit services organization shall not do any of the following:

(a) Charge or receive from a buyer who is seeking a loan or extension of credit any money or other valuable consideration before the closing of the loan or extension of credit.

(b) Charge a buyer or receive from a buyer of services money or other valuable consideration before completing performance of all services the credit services organization has agreed to perform for the buyer.

(c) Charge a buyer or receive from a buyer money or other valuable consideration solely for referral to a retail seller who will or may extend credit to the buyer if the credit that is or may be extended to the buyer is substantially the same as that available to the general public.

(d) Make or use a false or misleading representation in the offer or sale of the services of a credit services organization.

(e) Engage, directly or indirectly, in a fraudulent or deceptive act, practice, or course of business in connection with the offer or sale of the services of a credit services organization including, but not limited to, both of the following:

(i) Guaranteeing or otherwise stating that the organization is able to delete an adverse credit history unless the representation clearly discloses, in a manner equally as conspicuous as the guarantee, that this can be done only if the credit history is inaccurate or obsolete and is not claimed to be accurate by the creditor who submitted the information.

(ii) Guaranteeing or otherwise stating that the organization is able to obtain an extension of credit regardless of the buyer's previous credit problems or credit history unless the representation clearly discloses, in a manner equally as conspicuous as the guarantee, the eligibility requirements for obtaining an extension of credit.

(f) Fail to perform the agreed services within 90 days following the date the buyer signs the contract for services.

(g) Counsel or advise a buyer to make a statement that is known, or should be known, to be untrue or misleading to a consumer credit reporting agency, a person who has extended credit to a buyer, or to a person to whom the buyer is applying for an extension of credit.

(h) Remove, assist, or advise the buyer to remove adverse information from the buyer's credit record which is accurate and not obsolete.

(i) Create, assist, or advise the buyer to create a new credit record by using a different name, address, social security number, or employer identification number.

(j) Submit a buyer's dispute to a consumer credit reporting agency without the buyer's knowledge.

(k) Provide a service to a buyer that is not pursuant to a written contract that complies with this section.

M.C.L.A. 445.1824

Michigan Compiled Laws Annotated Currentness 
Chapter 445. Trade and Commerce 
Credit Services Protection Act (Refs & Annos) 
445.1824. Actions 

Sec. 4. (1) Except as provided in subsection (2), the attorney general, a county prosecutor, or a buyer may bring an action to do 1 or more of the following:

(a) Enjoin a person who is engaged or is about to engage in a method, act, or practice that violates this act.

(b) Obtain a declaratory judgment that a method, act, or practice violates this act.

(c) Recover actual damages consisting of an amount not less than the amount paid by the buyer to the credit services organization, plus reasonable attorney fees and court costs. The court may also award the buyer any punitive damages that it considers proper.

(2) A person shall not bring an action under this act more than 4 years after the date of execution of the contract for services to which the action relates.

(3) In an action under this act, the burden of proving an exemption under section 2(c) [FN1] is on the person claiming the exemption.

(4) This act does not limit or prohibit any other legal remedy available to the attorney general, a county prosecutor, or a buyer.

M.C.L.A. 445.1825

Michigan Compiled Laws Annotated Currentness 
Chapter 445. Trade and Commerce 
Credit Services Protection Act (Refs & Annos) 
445.1825. Violations; penalties; recovery of fees and other charges 

Sec. 5. (1) A person who violates this act is guilty of a misdemeanor punishable by imprisonment for not more than 90 days, or a fine of not more than $1,000.00, or both. Each transaction in violation of this act constitutes a separate offense.

(2) A credit services organization that violates this act is barred from recovering any fees or other charges from a buyer.

 

Case Law 
I identified no significant cases construing this statutes.

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 Michigan

A BOND IS NOT REQUIRED IN MICHIGAN.

Statute of Limitation on Debt in Michigan

Michigan credit repair businesses must be knowledgeable about the statute of limitation governing debt in Michigan 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.

Michigan Credit Repair License

We’re not aware of a state requirement for a “credit repair license” to operate a credit repair business in Michigan. 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 Michigan 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 Michigan

9.93 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 Michigan

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 Michigan:

  • 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

Why should I start my credit repair business in Michigan?
You can start and run a profitable credit repair business from anywhere once you have Credit Repair Cloud’s business software, but you do need to choose a home state in which to house your business. Michigan's Small Business Development Commission provides many resources to new credit repair business owners, including free business advice, business plan templates, and low-cost business training workshops in your area.
Where do I register my credit repair company name in Michigan?
You’ll first want to be certain that your credit repair company’s chosen name is available in Michigan. To check, simply search for your business name through Michigan’s Corporations Online Filing System (COFS). After you’ve ensured your chosen business name is available, you can register your business by following the appropriate business structure instructions found here.
How do I register my Michigan credit repair for business taxes?
The first step is to register your company with the federal government and receive a Federal Employer Identification Number (FEIN). With your FEIN you can log in to the Michigan Department of Treasury’s website to perform administrative tasks on behalf of your credit repair company through Michigan Treasury Online, including registering for state business taxes. You may not need an FEIN or state EIN depending on your business structure. Consult with your CPA and/or attorney to be certain.

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

How our easy method gets you UNLIMITED Clients without paying for advertising. . .

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.