This page will cover everything you need to know to succeed as a member of the credit repair industry. Opening a credit repair merchant account isn’t always easy, but we’re here to provide you with the tools necessary to make it happen (and to keep you in business).
Table of Contents
- State of the Industry Today
- Laws (Federal & State)
- Struggles Facing Credit Repair Merchants
- Industry Tips for Getting Your High Risk Merchant Account
- Commonly Asked Questions
- Additional Resources for Credit Repair Businesses
Credit repair services are sought out by many people across the country, generally to clean up their financial records and get boosted to the top of the credit score range in order to qualify for low interest loans and credit cards. Although looked down upon by banks due to the risk of chargebacks, working with people to fix their credit scores is a legal and beneficial practice.
However, getting payment processing set up for such a business can be a struggle. Classified as “high risk” by banks, credit repair businesses frequently encounter challenges when trying to open what most underwriters consider to be “high risk merchant accounts”. Many processors won’t even take their application.
While this is unfortunate, it’s not the end of the world. Motile has tried-and-true solutions for any company working in a legal industry, regardless of risk. We are ready to get you a credit repair merchant account, and keep your business running with dependable payment processing (it’s what we do).
Continue reading (or use our table of contents) to find out what’s trending in the credit repair industry, laws you should be aware of, struggles other owners are facing, frequently asked questions, and tips for getting your account approved.
State of the Industry Today
The US credit repair services industry is roughly a $6.4 billion market across about 41,500 businesses (IBISWorld, 2024). Demand is structural: using Federal Reserve data, roughly a quarter of US adults have a FICO score below 660 (Apollo Academy, 2024), and the FTC’s landmark accuracy study found 26% of consumers spotted at least one potential error on a credit report, about 5% serious enough to affect loan terms (FTC, 2013).
But this is also one of the most heavily regulated verticals in payments, and in 2023 it produced the single largest enforcement event in its history (below). That combination, real demand plus severe legal exposure, is exactly why processors treat credit repair as high-risk, and why your billing model matters as much as your marketing.
Relevant Laws (Federal & State)
Federal Legislation
As a credit repair merchant, the federal law that carries the most weight for you is the Credit Repair Organizations Act (CROA). Passed into law in 1996 by President Bill Clinton, the main takeaway from this piece of legislation is that accepting large upfront payments is illegal, and that services must be first rendered before payment can be taken.
It also requires credit repair contracts be fully written out, and grants consumers certain contract cancellation rights.
State Specific Laws
Depending on the state, you may need to adhere to certain credit repair or consumer laws beyond the CROA. Here’s a list of states where additional legislation must be taken into account:
Note: for states with no link, it’s assumed that that state’s government has ceded authority to the CROA, and adheres exclusively to the policies established by the federal government.
| Alabama | Hawaii | Massachusetts | New Mexico | South Dakota |
| Alaska | Idaho | Michigan | New York | Tennessee |
| Arizona | Illinois | Minnesota | North Carolina | Texas |
| Arkansas | Indiana | Mississippi | North Dakota | Utah |
| California | Iowa | Missouri | Ohio | Vermont |
| Colorado | Kansas | Montana | Oklahoma | Virginia |
| Connecticut | Kentucky | Nebraska | Oregon | Washington |
| Delaware | Louisiana | Nevada | Pennsylvania | West Virginia |
| Florida | Maine | New Hampshire | Rhode Island | Wisconsin |
| Georgia | Maryland | New Jersey | South Carolina | Wyoming |
CROA and the Advance-Fee Ban: Why Your Billing Model Is Your Legal Exposure
Credit repair is unusual: the law dictates when you can get paid. The Credit Repair Organizations Act (CROA, 15 U.S.C. 1679b(b)) prohibits charging or receiving any money “before such service is fully performed” (FTC). In plain terms, you cannot lawfully take a large upfront fee for promised future results.
If you sell over the phone or through online lead-to-call funnels, the FTC’s Telemarketing Sales Rule (16 CFR Part 310) is stricter still: you may not collect a fee until you provide the consumer a credit report, issued more than six months after the promised result was achieved, proving it (eCFR). This six-month rule is the exact provision that sank the industry’s biggest players.
The $2.7 Billion Warning: The Lexington Law Case
In 2023 the CFPB won a landmark case against the Progrexion, Lexington Law, and CreditRepair.com group for collecting fees before the required post-results window. The August 2023 judgment ordered roughly $2.7 billion in consumer redress plus civil penalties and a 10-year ban on telemarketed credit repair (CFPB). The company filed for bankruptcy that same year. The lesson for every credit-repair merchant: your billing structure is your single biggest legal and payment-processing risk.
The 2025 to 2026 Regulatory Reality
The CFPB scaled back its activity sharply in 2025, but do not mistake a quieter regulator for legal safety. CROA and the Telemarketing Sales Rule remain in force, state attorneys general retain authority, and CROA carries a private right of action, meaning consumers can sue you directly. The advance-fee exposure that produced the $2.7 billion judgment has not gone away.
Why am I “High Risk”?: Struggles Facing Credit Repair Merchants (and solutions)
Operating as a high risk merchant is a different ballgame than it is for members of low risk industries, and comes with its own set of challenges. Simply opening a credit repair merchant account is an endeavor – keeping it running and growing into the future is even more challenging.
The first step toward overcoming such struggles is to understand them. Here are four struggles facing credit repair merchants, and solutions for overcoming them when it’s time to face them head on.
1. Reputation of being scammy
Major publications like the Washington Post and others have been known to lambast the credit repair industry, frequently decrying it as one that “takes advantage of people’s desperation for a quick fix.”
While there are horror stories for customers of every industry, ones involving credit repair companies are particularly frequent. It doesn’t help either that services rendered are ones that anyone could do on their own with a bit of time and effort.
Solution: Don’t make promises you can’t keep. Many credit repair merchants tread a fine line between the truth and straight up dishonesty, and it’s important that you don’t make unrealistic claims to simply capture the attention of customers.
For instance, don’t advertise things you can’t do for certain (like raise a customer’s credit score by 50 or remove 4 negative items from their report). Instead, mention averages (our average customer sheds 2.2 negative items from their report and improves their score by 31.6), because you aren’t blatantly promising results. Sometimes it’s simply impossible to help someone improve their credit, so make sure your customers understand that too.
2. Frequent Chargebacks
Chargebacks are a merchant’s worst nightmare, and when you operate in an industry that caters to people hurting financially, they’re unfortunately inevitable. Keeping your credit repair merchant account open largely hinges on your ability to keep chargebacks low.
Solution #1: Invest in Customer Service. Having a 24-hour CSR on staff is invaluable if you want to stop chargebacks in their tracks. Many people are willing to work it out with a business if there is someone available to handle their pressing queries.
Microsoft conducted a study that found that 56% of consumers cut ties with a company because of poor customer service, and 30% of those customers were most frustrated at not being able to reach a living, breathing person to air their grievances (or handle their issues).
Solution #2: Refund First, Troubleshoot Second. Irate customers should be given refunds immediately, because they likely haven’t initiated a chargeback yet. Ensuring your credit repair merchant account stays open is predicated on a low chargeback amount, so think long-term goals and don’t worry about the cost of proffering a refund.
Once you’ve taken care of the refund, you can then go ahead and try to work to alleviate their concerns. It’s still possible to retain their business, so make sure your CSR’s are trained and ready to give it a shot!
Solution #3: Invest in Consumer Dispute Notifications: Companies like Chargeback.com and others provide message alerts when your customer begins the chargeback process. This gives you the opportunity to reach out to them, proceed with the refund process, and hopefully avoid taking a hit on your chargeback stats.
3. Lack of brand awareness
Unless you’re running an already established credit repair business, chances are your customers barely (if at all) know your company, or why you chose to operate in this industry at all. It’s good to get yourself out there if you want to start incepting trust into the minds of your future (and current) users, not to mention attracting new clients.
Solution: Embrace Visibility. Nothing freaks a customer out more than paying a business, and then having a difficult time getting in touch with them online/via phone when they have a question or concern. Make sure you have a good internet presence (social media pages, a nice website and “About Us” page), and be ready to deliver satisfactory answers when the time comes.
Plus, the more people get to know about you and your business, the more likely they are to put their faith in you to deliver results. Be visible, be transparent, and show your customers you’re not out there to swindle them.
4. Difficult Customers
The credit repair industry handles a very specific problem – one that isn’t likely to be of much concern to customers with deep pockets. Normal clients for a credit repair merchant include working class families, the less educated, and people who simply have weak credit scores for whatever reason (to be fair, sometimes they are weak due to misreporting).
Solution: Screen your customers. More specifically, don’t just take anyone’s business. Sit down with each potential client, find out what ails their credit score, and objectively determine if this is a person you can help with your services. It’s tempting to cast every possible customer into your net, but it will come back to haunt you if you’re not careful.
Four Industry Tips for Getting Your High Risk Merchant Account
Opening a high risk merchant account for a credit repair business requires not just effort, but a bit of luck as well. At the end of the day, there’s no surefire bet (although we like to think we have a better chance at making it happen than the average payment provider).
However, there are ways to push the odds in your favor. If you embrace the following four tips, you’ll be in much better shape when it comes time to sit down with a merchant services agent and iron out your contract (plus the necessary underwriting).
Tip #1: Get Your Ducks in a Row
Frequently, the biggest trick for getting a high risk merchant account setup is being organized. Having your taxes in order, assembling all the necessary documentation (which we’ve outlined in a previous blog post), and providing a clean sheet of your financial records will put a payment processor at ease. And more importantly, all of this will increase your chances of landing an account.
Tip #2: Apply for One Account at a Time
Your personal credit score should be an asset, not a liability, when you’re going through the steps toward opening your merchant account. Each time you apply for an account, the bank will pull the credit of both you and your business. This will hit your personal credit score, so if each pull reduces it by two points and you apply to 20 processors, you’ll take a 40 point hit.
Plus, if your merchant service provider discovers you’ve put in multiple applications, it will set off red flags and likely lead to the dismissal of your pending contract. Take your time, and go for a quality over quantity approach to this process. You might end up banking with this provider for many years to come, so you shouldn’t haphazardly launch out applications.
Tip #3: Understand that Payment Providers Respect Stability
If you can prove that you run a stable, growing credit repair business, you’ve already won much of the battle (in terms of opening a new high risk merchant account). Even if you’re completely new to the industry, being able to construe yourself as reliable with an effective business plan or a well-organized growth strategy will go a long way toward making a stronger case for you.
Tip #4: Work With an Agent
When you’re first getting into business, many things start to become clear – a big one being that there are a ton of payment processing options out there. Not to mention, with advances in technology, there are more types of merchant services today than ever. It’s a bit of a difficult world to navigate if you’re new (or even if you aren’t).
That’s where veteran payment processing agents come in. A company like Motile provides tailored payment solutions for their customers, because they fully understand the ins and outs of the merchant service world and work with a huge swath of providers. It’s easy to get a great industry-leading rate when you have a long-time payments veteran doing the footwork for you.
How to Bill Compliantly (and Keep Your Account)
Because CROA bars charging for results before they are delivered, compliant credit-repair billing moves away from a big upfront enrollment fee and toward:
- Monthly billing in arrears: charge after each service period, for work already performed.
- Performance-based billing: fees tied to documented, delivered results.
- Clean itemization of what each charge pays for, plus clear cancellation handling (CROA also grants a three-day cancellation right).
Your merchant account needs to support compliant recurring billing, not just recurring billing: post-service charge timing, tight retry logic, and clear billing descriptors.
Cost, Reserves, and Visa’s Dispute Threshold (VAMP)
Pricing is interchange-plus with a risk-based markup, plus monthly, gateway, and PCI fees. Expect a reserve, because credit-repair chargebacks can arrive months after the sale, so the acquirer needs funds on hand. Reserves come as rolling (a share of each batch held and released on a lag), capped (held until a cushion is reached), or upfront, and scale with your history and volume.
On disputes, Visa’s VAMP merchant “excessive” threshold drops from 2.2% to 1.5%, effective April 1, 2026 (Merchant Risk Council). A tighter ceiling means less room for error, one more reason compliant post-service billing, which produces fewer “I paid but my score did not move” disputes, protects your account.
The Credit Repair Risk-Tier Rubric: Where Does Your Business Sit?
Underwriters read your billing model as a compliance signal. Use this to self-assess before you apply.
| Factor | Lower risk | Higher risk |
|---|---|---|
| Billing model | Monthly in arrears or performance-based | Large upfront fee for future results |
| Disclosures | CROA contract, three-day cancellation, clear terms | Missing or vague disclosures |
| Sales channel | Web signup with clear consent | Telemarketing without the six-month proof workflow |
| Licensing | State registration and surety bond where required | Unregistered or unbonded |
| Dispute history | Low and documented | Elevated or unknown |
| Processing history | Prior clean statements | Prior termination, on MATCH/TMF |
Every row you can move to the left column lowers your rate, your reserve, and your odds of a decline.
Five Common Questions Credit Repair Merchants Ask
If you’ve made it this far, you’re already further along the path to success than the majority of your competitors. If you’re serious about getting your credit repair merchant account open and operational for the long haul, it’s good to stay curious and learn from others.
Here are five big questions many others in the credit repair industry ask, with corresponding answers and suggestions for them.
Question #1: How Can I Get Better Rates?
- Know what’s out there, and how rates work (wholesale vs. markup, for instance).
- Negotiate – wholesale rates are fixed, but markups can be changed if you have a strong case why you deserve cheaper processing.
- Run your business honestly and don’t make any rash financial decisions – as mentioned earlier, processors love stability. If you have a proven track record as a stable enterprise, you immediately have more bargaining power.
Question #2: Can I Improve My Processing Volume?
The short answer is yes. However, early on you’ll likely face less-than-ideal volumes. Don’t be deterred. After you establish yourself as a reliable merchant and prove to your provider you can keep chargebacks low, you’ll be in a better position to increase that volume.
Question #3: Is There a Reason my Funds Are Being Withheld?
Yes, and it’s probably not one you’re going to like. It’s fairly standard for payment processors to write a merchant account reserve requirement into the contract of a high risk business, and if they are withholding your money it’s likely you’re on the path toward an account cancellation.
This could be due to your chargeback ratio, suspicious statistical anomalies in your transaction total and revenue, or even because of excessive bad customer reviews online. Get in touch with your provider as soon as you notice a hold, and see what you can do to ameliorate the situation before it’s too late.
Question #4: What’s the TMF?
The Terminated Merchant File (or “MATCH list” for Visa / MasterCard) is a list that you definitely do not want to be associated with. If you’re on it, then you must have caused trouble for one of your previous banks or providers (or they at least they think you did). It’s in your best interest to try and reconcile this situation by reaching out directly to whomever placed you there, so you can do whatever necessary to extricate yourself.
Merchant service providers use the TMF as a tool to screen for risky applicants. Before getting serious about opening a merchant account, do your best to remove your business from this list – it has the power to stop you from opening bank accounts for all future businesses under your name.
Question #5: Why Did My Provider Close My Account?
Similar to why your funds are being withheld, your provider may have closed your account for chargebacks or sketchy account activity. If they are worried you’re laundering money or committing fraud, not only will they close your account but likely throw you up on the TMF. Make sure you understand why your processor shut you down, because it can impact your ability to open an account later on.
Can a credit repair company legally charge an upfront fee?
No. Under CROA you cannot collect a fee before the service is fully performed, and for telemarketed sales the FTC’s six-month rule is stricter still. Compliant models bill monthly in arrears or tie fees to delivered results.
What did the $2.7 billion Lexington Law case change?
It confirmed that collecting fees before the required post-results window is a serious violation. Every credit-repair merchant should structure billing to charge only for work already performed and keep proof of results.
Why do processors classify credit repair as high-risk, and can I use Stripe or PayPal?
The advance-fee legal exposure, delayed and non-guaranteed results, and dispute rates make it high-risk. Aggregators like Stripe, Square, and PayPal generally restrict credit repair and can freeze funds, so a dedicated high-risk account is more stable.
How do I set up recurring billing that stays CROA-compliant?
Bill after each service period rather than pre-charging future work, itemize each charge, honor the three-day cancellation right, and keep records of the work performed for each billing cycle.
What is a rolling reserve and why is one required?
A rolling reserve holds a share of each batch and releases it on a delay, giving the processor funds to cover chargebacks that surface months later. It usually steps down as you build clean history.
How do Visa’s 2026 VAMP rules affect my account?
Visa’s merchant “excessive” dispute threshold tightens from 2.2% to 1.5% on April 1, 2026, so keep disputes well below it. Compliant post-service billing and clear descriptors are your best protection.
What documentation and licensing do underwriters want?
A CROA-compliant contract with required disclosures, proof of any state registration or surety bond, a clear refund and cancellation policy, and processing history if you have it.
Additional Resources
1. National Association of Credit Services Organizations
Valuable resource for entrants into the credit repair industry. As the website for the official trade association of credit repair merchants, NACSO provides accreditation, relevant educational pieces, plus support for anyone in providing credit repair services.
2. Financial Counseling Association of America
Website for the credit counseling trade association. If you’re looking for anything from the basics to more advanced knowledge related to running a credit repair business, this is a great place to check out.
3. The FTC’s “Choosing a Credit Counselor”
Written by the Federal Trade Commission with consumers in mind, “Choosing a Credit Counselor” is a good resource if you’d like to better understand the perspective of your target customer.
4. CreditRepairCloud Blog Post: “How Much Should I Charge My Credit Repair Clients?”
Good introductory resource for anyone looking to iron out their pricing model for services rendered.
