We receive many questions regarding whether one should undertake credit repair actions or hire the services of a credit repair agency before or after consolidating debt. As usual, the answer to this question is not a simple one and will depend on many variables. Credit and debt problems change from one debtor to another and no general solution is available for all. However, there are some guidelines that can be followed in order to achieve positive results.
In order to understand what follows it is important to give a general idea of what debt consolidation and credit repair effects are. Both a debt consolidation and credit repair process have implications on each other and thus a correct combination of both in terms of time and opportunity can produce the best outcome and achieve the most advantageous results which is what everyone wants when undertaking such processes.
Debt Consolidation Effects
Debt consolidation produces several effects that can alter a credit repair process. For starters, depending on the strategy used, the amount of creditors may be reduced. If the process implies a debt consolidation loan which is used to repay all or the majority of the outstanding debt, then, all the creditors (or most of them) will be replaced by the new lender and thus, though some entries on your report may remain, from now on, you have a fresh start on your credit history.
If a debt consolidation loan is not the way to go, debt consolidation will imply only negotiations with current creditors to reduce debt and agree new repayment programs. Debt consolidation when it implies negotiation can also include the removal of negative entries on the credit report. In any case, the debt reduction alone will improve your credit score and history. However, certain debt consolidation agencies chose to default on several loans and lines of credit prior to negotiations in order to obtain better results and this implies new bad entries on your credit report.
Credit Repair Programs Effects
Credit repair programs have different effects depending on the stage of the program. At first, unfortunately, credit repair programs tend to make the applicant's credit score to drop to lower levels than the ones before joining the program. This is mainly due to the fact that credit repair programs often imply the interruption of payment of certain debts to make room for negotiations.
At a later stage, on the other hand, your credit score will continually increase as negative inputs on your credit report keep getting removed by creditors or by the mere pass of time. The interaction of credit repair programs and debt consolidation programs is not unpredictable. Moreover, there are agencies that provide both services.
The combined efforts of credit repair and debt consolidation can get you back to a good credit and financial stance in as little as two years. For some this may sound as a long time but let me assure that it is not. Investing two years time and efforts will result on a good credit score and access to all financial products available for those that never had bad credit. Thus, the answer to the question asked at the beginning of this article is simple: neither before or after, at the same time.