Make sure your credit repair company is following the rules
There are many hurdles that you will face when running your credit repair company. You will have to prove yourself every step of the way; convincing customers that you are a legitimate business that is ready and willing to help repair his or her credit score.
There are some major things that you could be doing that are throwing up red flags. To make sure that you are not waving any flags, here is a list of some major Do’s and Don’ts for credit repair companies.
DO: Inform clients of his or her rights; to do this on their own and how to cancel their credit repair contract. Before any contract can be signed and work begun, it is important that clients are informed of his or her rights. Clients have the ability to repair their own credit if they want. It is required by the law that you inform clients of the right to do the credit repair process by themselves. Clients also have a right to know that they can cancel the contract at any time and that they can avoid charges if they cancel within a few business days of signing the contract. Each state has a different timeline ranging from about three to five days. During this time period you are not allowed to work for the client because you can not charge for any work done prior to the contract getting signed.
DO: Provide a Written Contract. After informing clients of his or her rights, it is time to give them a written contract. Clients must have a contract stating his or her rights, that they can cancel without charge within a few business days, what the cost will be, an estimated timeline, and information about your credit repair company. You will also need an area for them to sign their signature.
DON’T: Ask for payment before working. It is illegal to ask for payments upfront before any work is done. There are different types of payment options such as a monthly fee or a price based on the changes to the credit score. Both options are acceptable, but with monthly fees ensure that you are actually doing work when you are charging clients.
DO: Look over a client’s information. You will have to ask your clients to give you his or her credit report. If you do not ask for this information then there is no way for you to know what you are dealing with.
DON’T: Overpromise. This point goes hand and hand with the previous “Do.” If you don’t have all the information about a client’s credit history do not promise that you can completely change his or her score. It is like expecting a fortune inside a fortune cookie and finding an empty shell. This will upset clients and lead them to believing you are untrustworthy. When talking about a time frame you must legally give an estimate of how long this process will take. These things can take time and clients need to know that they have to be patient.
Remember that customers are protected by the Credit Repair Organizations Act. Having a firm grasp on this information will help you keep your credit repair company legitimate. Click here for a more in depth look at the Credit Repair Organizations Act. Also be aware that each state may have more regulations that you need to know.