Know The Difference: Credit Repair And Debt Consolidation
(ReliableNews.org) – Credit repair and debt consolidation can each play an important role in getting and keeping control of one’s finances. Luckily, deciding which one is best is pretty straightforward. If one’s credit score is less than optimal, it may be due to errors in a credit report, so taking the steps to repair it may be the way to go.
On the other hand, if one carries a lot of different debts, consolidation and debt reduction may be the best path to take. Having less debt can show creditors the borrower has available funds to pay back loans and gives finances some breathing room so money can be used in a more productive way.
Details on Credit Repair
While repairing one’s credit could inevitably improve the score, repairing involves determining exactly what’s on a credit report to correct any errors. It’s for people looking to improve their borrowing power or for those who suspect they have an inaccurate report.
To begin the process, first pull a credit report. The law allows credit checks at any time, but it’s free once every 12 months, and it won’t hurt one’s score. Borrowers can request reports from Experian, TransUnion, and Equifax and check them for any errors. In the event one discovers a mistake, it can be disputed with individual credit bureaus. Disputing mistakes can be timely and difficult, so this is where legal assistance comes in handy. While there’s no guarantee correcting one’s credit reports will improve a credit score, it could help.
Details on Debt Consolidation
Debt consolidation might be the best choice if one holds multiple debts and the goal is to focus on paying off the balances. Handling several balances can prove difficult because of various minimum payments and varying interest rates. Instead, consolidation rolls the debt into one loan and involves making one payment with a single interest rate. It doesn’t reduce the amount of money owed, but it can simplify one’s obligations and make it easier and less stressful to retire the debt.
Which Should You Choose?
The path to choose depends on one’s financial situation. Start with credit repair if there are suspected errors on a credit report or you’re simply looking to boost a low credit score. If there are multiple credit card bills or other debts, it might be wise to consolidate, simplify, and pay down the obligations. No matter which one is appropriate for the individual, each option is an important tool to improve one’s overall financial health.
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