The Credit Repair Services industry is in the midst of a transformative period. The Baby Boomer generation, which has long been the industry’s main customer base, is aging, and as more and more of these consumers enter retirement, they are increasingly taking advantage of the industry’s services. At the same time, however, the industry is being buffeted by two major trends. First, advances in technology are making it easier for consumers to monitor their credit scores and correct any errors on their own. Second, an increasing number of consumers are becoming delinquent on their debts, owing creditors more money and increasing the need for credit repair services.
Despite these challenges, operators in the Credit Repair Services industry have thrived over the past five years. In response to consumer demand, they have increasingly turned to new technologies and methods to improve their services.
Understand the Laws Relating to The Credit Repair Industry
Consumers in the Credit Repair Services industry face two major challenges: bad credit and prospective-creditor harassment.
First, there have been significant improvements in technology-enabled credit reporting, the mechanism responsible for generating credit scores and report information. For example, Second Review and its successor, FICO score, is by far the most well-known model for credit reporting and credit scoring in the United States today. Though many consumers have been receiving notices of agreement for the past few years, few actually understand what the Responsible Lender Act is. These improvements eliminated almost all false negatives when updating the credit report. Needless to say, a damaging transaction can happen to anyone at any time.
Second, even though the prospects of misleading consumers has been in decline, an increasing number of consumers are becoming delinquent on their debts, owing creditors more money and increasing the need for credit repair services.
If a prospective creditor sees a credit repair service reaching delinquent consumers, he or she may view them as being indebted. This leads your client to wrongly believe her credit is not in order. She may think she needs credit repair, rather than responsible credit management.
What Negative Pieces of Information Are Impacting Your Credit Score?
Although you can take actions to improve your credit, there are still a number of negative behaviors that can have a negative effect on your credit score.
It’s important to know the credit reporting agencies have different guidelines for when negative information is reported. Citibank and Experian allow you to report negative information for only 180 days before the account is turned over to a collection agency.
This means they will often send you a letter, asking for closing information within two months of the first credit report request, and will then report the collection agency fair and balanced information within the next six months of the report.
What is the Most Common Income Reporting Mistake?
A lot of people add revenue earned from side activities (involving other companies) when reporting or recording their income. This may give them some kind of false boost in their revenue on their taxes, as they incorrectly report the income on their personal income tax returns as being taxable income.
This is a mistake that you should be careful about accidentally reporting when filling in your income tax. This mistake is increased if your revenue still under the threshold, given that profits will be more difficult to apply.
Using the free calculator provided by the HMRC, it’s possible to see how wrong statements may end up measuring up to your tax threshold, where businesses are liable to payment of HMRC.
This is a serious mistake that is more likely to be intercepted by the HMRC if you report your income incorrectly. If this is a complicated side income, you should definitely pay more attention at quarterly profits reports and annual returns to minimize the chance of this occurring.
Mistakes to Avoid when Helping Your Customer to Rebuild Credit
If you think you have a special ability to fix someone else’s credit score you are wrong, because all that you will achieve is a lower credit limit or even the potential for a debt collection agency to disrupt and completely close someone else’s credit file, destroying your effort and all your good work.
Speak with your customer carefully and always try to know the reason you are helping them with their troubled credit file.
If they just want to change their inactivity record, rather than trying to get recommendations, want to actually repair their bad credit report or know clearly the reason to report their name for correction.
Tell them what type of mistakes are they doing and how to find loans and mortgages that have the best terms.
Let them know when to get their credits on time and structure their credit.
Engage with their organization and ask them relevant questions such as are you applying for better credit card? Applying for a rental? Borrow from a friend?
Read more: [https://www.lowdebt.com/your-guide-to-help-your-customer-to-renoir-their-credit-management/](https://www.lowdebt.
How To Build A Client-First Relationship with the Credit Repair Industry
Since the industry is revenue based, it is not in the business of being disciplinary.
The credit repair industry is a debt collection intermediary having lines of business that includes:
1. disputing errors in your credit report
2. getting paid all or part of your debt
3. or stopping collection agencies from pursuing collections.
While we could go through all three business lines and explain how each one has different adequacy standards than one another, the reality is that you cannot be legitimate in the credit repair business unless you follow the law.
It is important to understand that collection agencies are burdened by two sets of laws. The first are the Fair Debt Collection Practices Act (FDCPA), a law designed to protect consumers from companies that falsely report debts, those who make harassing phone calls, or those who sign up for debts that don’t exist.
FDCPA also goes on to say, any company collecting a debt has very clear obligations to you. These obligations include:
1. Collecting the debt only if it is legally allowed
2. Collecting an amount equal to what you can afford
3. Not making false statements
These laws have a lot of gray area, so it is crucial you hire a licensed agency to do your debt recovery in a non-harassing manner.
The FTC Act, on the other hand, cracks down on those that mix collection rights and service rights.
Take into account the uncertainties for the Credit Repair Services industry and opportunities available to operators.
• Demand for Credit Repair Services is growing as the aging Baby Boomer generation, which has long been the center of insomuch as its loyal customers, retires. So operators should expect to provide credit education and free credit scores to existing customers as the demand increases.
• Arise from the recent spate of legislation in credit repair. As customer expectations increase due to evolving marketing standards and scarcity of markets, new laws and consumer protection agencies will need to be developed in order to ease them while remaining meaningful and relevant.
In conclusion, the credit repair industry is a necessary service for many Americans who have bad credit. While there are some scams out there, there are also many reputable companies that can help you improve your credit score. If you’re considering using a credit repair service, be sure to do your research to find a reputable company.