Credit Repair

Does Credit Repair or Debt Management Hurt Credit Ratings?

If you’re one of the many people looking for a way to improve a bad credit score, you’re probably also wondering how to go about it without making things worse. There are a lot of myths surrounding bad credit and what causes it, but one thing is for sure:

Credit repair and debt management do not hurt your credit ratings. Both of these processes are meant to help consumers establish better credit practices, and neither will negatively affect your score. So what are credit repair agencies and debt management programs? And how do they work? Keep reading to find out.

What is credit repair?

Credit repair is basically what it sounds like — going through the steps to improve your credit score, either with an agency or on your own. It’s good to remember that an agency can’t officially do anything that you can’t do yourself. However, if you’re feeling overwhelmed or unsure of how to proceed, working with an agency can be helpful.

Credit repair agencies will review your credit reports, and may also contact creditors on your behalf to dispute any errors on your reports. When working to repair bad credit yourself, you’ll take similar steps, as well as making a plan to pay off debts, pay bills on time and implement better credit habits.

Ultimately, whether you decide to work with an agency or do it yourself, credit repair should not hurt your credit score. Working with an agency ultimately consists of the same steps you would take yourself — like checking your credit report and investigating negative (and potentially inaccurate) marks on your report, neither of which are harmful to your credit score. On the contrary, working to repair your credit can actually improve it — though it may take some time.

Pros and cons of working with a credit repair agency


  • Takes less of your time
  • Saves you from the aggravation of having to research negative marks on your credit report and get in touch with creditors


  • Working with an agency may be expensive
  • You’ll still spend a bit of time researching the best agency to work with — someone reputable you can trust

For a complete list of pros and cons, check out our post on DIY credit repair.

What is debt management?

Debt management is a program that involves a combination of strategies to help you pay off your debts. Often debt management programs include making one monthly payment to your credit counselor, who will then use that money to pay your lenders. Your counselor may also work with your lenders to lower interest rates and waive fees or penalties, thereby allowing your monthly payment to go toward the principal amount, resulting in you paying off your debt faster.

While the fact that you are working with a credit counselor may show up on your credit report (only if your lender chooses to report this information), it will not negatively affect your credit score. Because the goal of debt management programs is to get debt under control and start making payments on time, you may even see your credit score improve over time.

Pros and cons of debt management programs


  • The potential to pay off your debt faster by taking advantage of the lower interest rates negotiated by your credit counselor
  • The ability to avoid bankruptcy or increasing debt
  • Counseling to help you establish better credit practices


  • May take several years to complete‚ typically four to five
  • Most programs will not allow you to continue using your credit card or to open new credit cards while enrolled
  • Certain bills cannot be included in the program, including mortgages, auto loans or any bills that have landed you in court
  • These programs may cost you, including a startup fee plus monthly fees that average $25-$35

The bottom line

Credit repair and debt management are worth considering if you find yourself feeling completely overwhelmed by your debt or poor credit score and unable to improve the situation independently. Under these circumstances, it might be worth calling in the experts to help you along and speed up the process.

While these programs may cost a bit of money and may even place certain restrictions on your spending, they’re ultimately designed to help you get out of debt and improve your score as quickly as possible, all while keeping your accounts in the black.


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