Credit reporting agencies are responsible for letting potential lenders know the credit history of borrowers so that they can make a decision as to whether or not to lend funds to their clients. It is a very lucrative but very involved business to get in to. If you are thinking about starting up a credit reporting agency, you need to be aware of all of the hard work and money it will take to get it going.
How to Start a Credit Reporting Agency
Research the Market
- Before attempting to open your own credit reporting agency it is vital that you conduct a thorough investigation into the requirements and everything involved in owning and operating such a business.
- Investigate other credit reporting agencies to see how they gather and distribute information from lenders and other clients.
- Research and know all there is to know about credit defaults, limitations, liabilities, percentage rates and everything else. This is vital if you are going to try to set up a successful agency.
Education and Training for Credit Reporting Agency
- Starting a credit reporting agency is very involved and requires a lot of knowledge of the market. Accounting and finance classes are a must just for the basics of the educational background needed. You will also need to study commerce, e-commerce, business yields, the world trade markets, profit and loss yields, credit rates and a host of other business finance information.
- Business and Finance law is another area that should be considered as a requirement to start up this kind of business. You will need to be aware of what you are legally able to collect in terms of information from clients without violating and privacy laws and regulations.
- You will probably need some kind of legal background, especially when you are just starting, to make sure that you are not illegally suing someone for debts before you are allowed to do so. It will also help you to know the limits your business can meet before being considered harassment to clients.
- Your agency will probably serve more than one area and/or state. It is imperative that you become familiar with federal and state laws so that you are not violating any laws or regulations that may differ from state to state.
The Business Plan for Credit Reporting Agency
- You will need an exceptional business plan to be able to get funding to help you start your business. A business plan summarizes and details how you envision your company, the profit and loss projections for five, ten and even fifteen years and will give potential investors an idea of your company before they invest in it.
- Include in your business plan all of your financial information. Such information consists of your financial records, bank statements and tax records for at least five years and other assets and liabilities. Also include the names and contact information of financial institutions that hold your accounts for easy access to the information you and potential lenders may need.
- The business plan will also include a marketing strategy to show how you plan to advertise your business. A five, ten and fifteen year projection of what you expect in terms of profit and loss should also be included.