In general, debt consolidation is useful if you have several debts with different interest payment schedules and interest rates. On the other hand, credit repair is very useful for those looking to clean up their credit reports and ensure that they have an accurate credit report. There are ways to improve your credit, but you can implement many of these strategies on your own without having to pay a high fee to a credit repair counseling firm. You can probably repair your credit yourself if you have time to invest in it, but sometimes it's best to ask for expert advice.
From agencies that offer “same-day credit repair” to debt consolidators that offer “secured loans,” many of these proposals are, at best, questionable. It's important to keep in mind that neither debt consolidation nor credit repair are overnight solutions and can involve very different processes. Credit repair is an attempt to eliminate “some of the financial sins you've already committed without paying attention to helping you understand and avoid problems in the future.” Both credit repair and debt consolidation are ways to mitigate your debt, but which option is best for you will ultimately depend on your circumstances. If you identify errors in the credit report, credit counselors should advise you on how to correct those errors.
Good credit means better interest rates for homes, cars and credit cards, lower insurance rates, easier access to rental apartments and public services, and perhaps even better job opportunities. Choosing between credit repair and debt consolidation may seem, at first, like choosing between two sides of a coin. The ACCC offers debt relief options to individuals and families experiencing stress related to credit card debt by providing effective credit counseling, helping to consolidate debts, and advising on debt management. It's best to find a non-profit credit counseling agency and let them guide you through the rough waters of your credit report.
Their efforts include examining your credit report and explaining the impact that each item has on your credit score. Because of the way credit scores are calculated, your credit may decrease temporarily after you consolidate your debts. Credit counseling is an attempt to teach you how to manage your money so that you can avoid debts that may be contaminating your credit report. Credit repair and debt consolidation services offer a better financial future, but deciding between the two may depend on your personal circumstances and priorities.