Most Common Reasons Credit Repair Merchant Accounts Get Declined

If you're a credit repair business looking to secure a proper merchant account, chances are you understand how difficult the underwriting process can be. Payment processors (and their accompanying banks) tend to reject credit repair businesses applying for specialized merchant accounts because of the inherent high risk, both in processing and in action.

People with poor credit tend to be the primary customers for credit repair institutions, something that could keep banks from wanting to get involved. Even with these roadblocks in the underwriting process, a credit repair business can still secure a high-risk merchant account and thrive. For starters, they need a platform with dedicated merchant account services that can block likely barriers, such as high chargeback rates and routine fraud attempts, when they arise.

With Adaptiv Payments, you can get instantaneous alerts detailing exactly when and where your account is being flagged. This way, companies can minimize their risk profile and stay on track no matter the sales volume.

Keep your credit repair business in motion by first identifying the common industry risks you may face as a high-risk merchant:

Common Risks for Credit Repair Accounts

It's not just sketchy behavior that keeps credit repair accounts in the red flag loop. It's natural, reputation-based accusations that perpetuate the idea that they cannot be trusted. You could have a long history of clean business, and a bank still might reject your application simply because you work in credit repair.

Soon enough, you're dealing with a terminated merchant file (TMF) and no way back. Luckily, Adaptiv Payments can help identify those rolling risks before they happen, better protecting you from operational hangups you can't control.

Credit card processing, credit score repair, and other commonplace services carried out by a credit repair company may all come with the following risks:

High Chargeback Rates

Because credit repair is complex, customers often grow tired of trying to understand the rules, which may result in a large number of chargebacks all at once. Banks know that the credit repair industry is associated with quick, high-volume transactions, and so they aim to use that against these merchants in the application process.

Insufficient Business History

Just like a person with a limited credit history may struggle to get approved for a credit card, companies with limited business history may be deemed undesirable by both banks and mainstream processors. This is because they can't fully assess the risk of your business, which for some banks, is an even bigger gamble than working with a high-risk client.

Unclear Service Structure

When it comes down to it, even unclear content can result in a denied application. Banks like to see your services plainly stated on your website, with accurate pricing and straightforward billing information. State exactly which credit card payments are accepted so there are no additional questions to be asked by underwriters.

Poor Personal or Business Credit

Even if you're a business owner, your personal credit can transfer over into the underwriting process, as banks might consider bad personal credit an extension of your future business transactions. And because you’re supposed to be helping customers improve their credit, you're also expected to maintain good business credit across your own accounts.

A payment processing platform like Adaptiv Payments is the only way to build real-time solutions against common risks. This way, you have a better chance of avoiding the most common reasons credit repair accounts get declined by design.

Proven Ways to Combat Risk and Increase Your Chances of Approval

While you can't avoid risks completely, you can protect your reputation as a business and keep operations running smoothly by staying in compliance. The way to do that? Get quick notifications when you might be experiencing:

• A large volume of transactions
• A higher number of chargebacks

These features are built into specialized processing platforms like Adaptiv Payments. You'll know in real time if your company is at risk, and have the tools necessary to combat each flag.

Here's how you can push back against those common red flags in-house and look more appealing to future payment partners:

Establish Strong Compliance Evidence

Work hard on establishing a trusted name for your business. Plainly state your business policies on your landing page, so users instantly know what they can and can't get with your services. Be clear, upfront, and thorough, and banks just might take you seriously the first time around.

Avoid Top Red Flags of “High-Risk” Merchants

A few red flags banks look for during the underwriting process include:

• Inconsistent Cash Flow
• High Refunds/Chargebacks
• Recurring Billing Complaints

Minimize these common risks by implementing business best practices and documenting them clearly for your clients. And even better, partner with a payment processor that offers the tools to help you combat these issues ahead of time, and in real-time.

Lower Your Chargeback Risk

For credit repair companies, it may be inherently harder to lower your chargeback risk. This is simply because people frequently misunderstand what services you offer. Clients think they'll get instant, life-changing results without putting in the work themselves.

Because of this, you can't lower your “risk” in that sense, but you can remain clear about how your firm operates. Start by having:

• A Clear Refund Policy
• An Upfront Dispute Process
• Recorded Authorization Calls
• Always Available Customer Service

Keep Clear Financial Documentation

While it may seem helpful to withhold less appealing information, banks love transparency. They're much more likely to build trust with you if you're upfront about your processes and history. Make sure to provide your bank with clear financial documentation so they can see how your business moves, both in the past and in the future.

Provide them with:

• Bank Statements From the Last 3-6 Months
• Merchant Statements From the Last 3-6 Months
• Your Profit & Loss (P&L) Statement
• A Balance Sheet
• Voided Business Checks

Maintain a Positive Online Reputation

Just like employers, banks do a full background check on your company. They'll sift through your Google reviews to hear how your customers really feel, and use this information to their advantage. So, make sure to survey your general online reputation. You can do this by checking your BB score or sifting through public complaints.

Get Your Credit Repair Merchant Approved Quickly with Adaptiv Payments

Despite doing meaningful, positive work, credit repair merchants still struggle to get accepted by banks and many other merchant account providers. Why? The nature of the business. People at their lowest often go to these corporations for help, which in turn causes them to be deemed 'high risk.'

In an attempt to combat common risks and prove that your credit repair business is trustworthy (despite the reputation), Adaptiv Payments offers specialized services, like industry-specific merchant processing tools, that stop these risks as they happen, giving banks a clear reason to work with you.

Contact us to get started today.