Free online services will continue to pose a threat to the industry.
New York, NY (PRWEB) August 04, 2014
The Credit Repair Services industry largely moves countercyclical to the business cycle; therefore, the recession increased demand for credit repair services due to rising unemployment and falling disposable income. These factors, coupled with an increased debt load taken on by many consumers during the housing boom, caused many households to fall behind on payments and seek assistance from industry professionals who help identify errors in credit reporting and dispute the inaccurate information with credit reporting agencies. “In the years following the recession, however, unemployment and household debt declined,” according to IBISWorld Industry Analyst Sarah Kahn. Additionally, many debt-ridden consumers did not seek out industry services, preferring to avoid the fees, file for bankruptcy or take advantage of free online services similar to those offered by this industry. Consequently, industry revenue is expected to decline at an annualized rate of 3.8% to $6.0 billion over the five years to 2014, including an 8.6% drop in 2014 alone.
Although access to credit surpassed prerecessionary levels, aggregate household debt is on the rise, and banks and other lenders are once again lending to risky credit-card borrowers, industry revenue is expected to continue declining. “With the help of the Federal Trade Commission's do-it-yourself instructions, increasingly financially- and internet-savvy consumers are turning to credit reporting agencies on their own,” says Kahn. Additionally, the industry's negative reputation stemming from deceptive practices and charging advanced fees for services, both of which violate the Credit Repair Organizations Act, introduced skepticism in industry services; this further encouraged consumers to improve their credit scores through other means.
According to a 2013 Federal Trade Commission study of the US credit reporting industry, 5.0% of consumers have errors on one of their three major credit reports. Consumers are expected to continue seeking ways to repair their credit score, but industry operators are expected to offer complementary services in order to provide added value. As the percentage of services conducted online increases, however, potential consumers will turn to free options.
For more information, visit IBISWorld’s Credit Repair Services in the US industry report page.
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IBISWorld Industry Report Key Topics
This industry identifies errors in credit reporting and disputes inaccurate information with the appropriate organizations to improve credit ratings. These services are typically undertaken on behalf of a client who has known credit problems, such as a recent bankruptcy. This industry does not include nonprofit firms that offer credit-counseling services.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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