What Is the Difference Between Credit Repair and Debt Consolidation?

Low credit scores can come from a number of things such as late payments, collections, not having enough credit, too much debt, etc.

But sometimes consumers aren’t sure if they should look into credit repair or debt consolidation in an effort to get their finances back into shape.  If you find yourself in this position, the first step is to understand the difference between the two.

Credit Repair

Dedicated Credit Repair actually performs “credit repair” service.  This means that we have negative credit items such as late payments and collections removed from your credit report.  There is a very specific process for accomplishing this and rules that must be followed in an exact manner.  However, when you follow the rules (as we always do), you can legally get negative items removed and as a result, credit scores will go up.  It will typically take a few months to see the scores increase, which is why you would want to go through this process before you start shopping for a new house.  In almost all cases, we see significant increases in scores as clients progress through our program.  Credit repair is almost always a much faster process than debt consolidation.

Debt Consolidation

Debt Consolidation is actually VERY different from credit repair.  It allows you to combine various debts all in to one bill.  Sometimes, this can lower your monthly payment because you may be able to get a lower interest rate on the debt consolidation loan than on higher rate credit cards.  However, if you had late payments or negative credit items from your various debts, consolidation will not remove those negative credit items from your report.   Debt consolidation can take years to get through because you’ll have the consolidation loan on your credit until it is paid in full.  Additionally, the credit bureaus will know that you are in a consolidation program and will almost always lower your credit scores as a result.

If you are looking for a way to possibly pay off your bills faster, debt consolidation may help you to do this.  But if you are looking to boost your credit scores, you’ll need credit repair and not debt consolidation.

If you have questions or would like more information about the credit repair process, please contact our office.  We’d be happy to assist you.