Debt Consolidation vs Credit Repair: How Do They Differ, and what is right for you?
Your finances are an essential aspect of your everyday life and lifestyle. You want to have good financial health for the best outcome. Therefore, it’s important to manage and spend your money wisely.
If you’re looking to improve your credit score then both of these can be helpful in your case. Start by learning more about debt consolidation vs credit repair and how they differ so you can, in turn, determine what is right for you.
What is Debt Consolidation?
It’s important to understand these terms before you can decide which is right for you. Debt consolidation is essentially a strategy you can use that will allow you to simplify payments and reduce interest by way of combining several debts. It might be good to do if you have a decent credit score and want to simplify debt payments that you have under control already.
What is Credit Repair?
On the other hand, credit repair is a plan that allows you to rebuild your credit by verifying information with creditors and disputing errors on your credit report. If you have a low credit score and difficulties managing your credit or a credit report that’s inaccurate then this might be the most helpful solution for you.
Differences between Debt Consolidation & Credit Repair
Debt consolidation is ideal when you have multiple debts that contain different interest rates and different interest payment schedules. Alternatively, credit repair is best to use if you want to clean up your credit reports and make certain that you have an accurate credit report.
How to Do Each of Them
Debt consolidation is quite simple in theory. There are several ways to do it such as by completing a balance transfer, tapping into home equity, or taking out a debt consolidation loan. You can tackle it on your own if you have a manageable amount of debt and can strategically work to reorganize multiple bills with various payments, due dates, and interest rates. As far as credit repair goes, you should start by getting a credit report and negotiating or disputing negative items. For the best results you should make an effort to pay your bills on time, keep your current accounts open as well as use cash instead of credit whenever possible.
Credit Repair on Your Own vs with Help of A Company
You may be wondering if you should use a credit repair service or attempt to do it on your own. It will cost you some money and will take time to have credit repair done with the help of a company. A reputable company can help but they also won’t make promises they can’t keep. They also should advise you on how to manage your existing credit reports properly so you don’t do any further damage. On the other hand, you can focus on repairing your credit yourself by disputing errors on your credit report, working on your payment history, and using less of your available credit. It doesn’t matter if you use a credit repair company or do it on your own, you should always have a plan in place for building and maintaining your credit in the future.
