Startup Credit Repair Business

S

Samantha

Member
I live in Texas, and I’ve helped a few friends successfully repair their credit. After seeing the results they’ve encouraged me to turn it into a small side hustle for a bit of extra income.

That said, I want to make sure I go about it the right way. When I helped friends, they’d simply hand over their info and I’d take care of the process but I realize that approach wouldn’t be appropriate or secure if I started offering this to clients I don’t personally know. So my question is: What are the proper steps to make this a legitimate business in Texas? I’m not looking to turn it into a full-time career and I wouldn’t be charging much, but I do want to make sure everything is compliant and above board from the start.

Any advice on how to get started legally, ethically, and efficiently
 
Start by forming an LLC. Texas makes it pretty simple through the SOSDirect website. This protects your personal assets and gives your biz a legit foundation. Next get an EIN from the IRS (it’s free). Since you’re dealing with sensitive financial info, look into a business liability policy and maybe even cyber insurance. Also, familiarize yourself with the Texas Credit Services Organization (CSO) Act... you’ll likely need to register. Not legal advice just what i did last year!
 
Helping friends is one thing, but the second you charge strangers you open yourself up to legal responsibility. I’d recommend taking a credit repair course.... there are a few good ones out there that cover compliance, client intake, disputes, etc. Make sure to use client agreements with disclosures and NEVER ask for payment upfront. Texas can be strict about this kind of stuff.
 
Love that you're trying to do this ethically. One thing to remember is that Texas requires registration as a Credit Services Organization before offering paid help. Also, they want you to carry a surety bond of $10,000 minimum which can cost around $100–$200 annually depending on your credit. Definitely open a separate biz bank account and think about using a CRM like DisputeFox or CDM Software to manage client data securely.
 
You sound like you’ve got the right mindset. For a small side hustle, I’d go the LLC + EIN + CSO registration route. Keep a spreadsheet of every dispute you send. And DO NOT impersonate clients when filing disputes let them sign things themselves and use limited power of attorney if needed. The FTC really cracked down on companies doing this.
 
under the Credit Repair Organizations Act (CROA) you legally cannot charge for services until after they’ve been performed. That means no upfront fees at all not even for file setup. Also, you must give clients a copy of their rights under CROA and a written contract they can cancel within 3 days. Most new repair businesses trip up here.
 
Haha i started helping my cousin and suddenly had a whole Facebook inbox full of people needing help. I turned it into a side gig too but the paperwork was not sexy. I used ZenBusiness to set up the LLC then got a surety bond via Colonial Surety. If you wanna keep it small you can do manual disputes and use Google Sheets just keep that data protected!
 
I do taxes for a few credit repair businesses in Texas. You’ll want to opt for pass-through taxation as a single-member LLC to keep things simple. Track every dollar mileage, postage, office supplies, software..... it adds up for deductions. And don’t forget to collect sales tax in Texas if you charge for financial advising. Weird but true!
 
Please don’t just use templates off the internet for dispute letters. They’re everywhere and credit bureaus recognize them instantly. Learn how to write custom disputes. Credit repair is about strategy, not spam. I read the FCRA and CFPB complaints page weekly to stay sharp.
 
You could also offer credit coaching instead of repair. Teach people how to fix their credit versus doing it for them. That way, you're not bound by CROA rules as tightly, and there's no need for a surety bond. Still need to be careful, but it’s a little more flexible if you’re just doing this part-time.
 
check out Client Dispute Manager Software. It’s pretty good for keeping client data safe, offers dispute templates, and helps track everything. They also have training built in. For side hustlers like us, it can be a game changer compared to juggling spreadsheets.
 
Honestly too many people jump into credit repair thinking it’s a quick buck. But this industry is super regulated and can get shady FAST. I’d say unless you’re planning to scale it into a full biz, you might be better off sticking to coaching and free resources. The liability isn’t worth $50/month gigs, imo.
 
Respect for wanting to do it right! Educate your clients, too. I have folks who think deleting a collection will raise their score 200 points overnight. Managing expectations is half the battle. I always start with a consultation where I explain the process and timelines. Helps avoid stress and angry emails
 
Hey neighbor fellow Texan here. I registered as a CSO through the Secretary of State cost me about $100 and the bond was $150/year. Not terrible. Just remember you’ll need to renew annually. I also got my contracts reviewed by a local small biz attorney. Worth the $300 for peace of mind.
 
You ever consider white-labeling for an existing credit repair firm? Some will let you bring your own clients and take a cut while they do the work. Could be a good middle ground if you don’t want to handle compliance solo. Just make sure it’s a legit outfit not one of those MLM-style ops
 
Don’t forget branding and online presence. Even if it’s a side hustle, people will Google you. Get a clean website, a basic privacy policy and set up a business email. It goes a long way with trust, especially when dealing with people’s financial lives.
 
I filed bankruptcy in 2016 and credit repair saved my life. The guy i worked with turned it into a biz and now runs a 6-figure company. He said the key was building trust clear expectations, responsive communication, and NEVER promising results. That’s what keeps you out of court.
 
I started mine during COVID and still keep it running on the side. Used Canva for contracts (with disclaimers), MailerLite for emails, and Square to invoice. Keep it lean but professional. Also, get familiar with CFPB bulletins those things are gold if you want to stay compliant without a lawyer.
 
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