Designed by Cursive Media

Why Credit Repair Is Better Than Settling Debt in 2023

Joe Mahlow avatar

by Joe Mahlow •  Updated on Aug. 09, 2023

Why Credit Repair Is Better Than Settling Debt in 2023
A caption for the above image.

If you're looking for ways to eliminate or settle your debt, and you're doing Google Searches left and right, the number of options that pop up will definitely leave you feeling overwhelmed and confused...

Should I settle my debt, or should I try to remove the debt from my Credit Report with Credit Repair?

Many companies will try to push their services without clearly understanding what they are offering or doing for your Credit.

Instead of wasting valuable hours searching for the best option, I'll lay them in IN DETAIL so you can easily decide which would work best for you.

The first step is to break down what "Credit Repair" and "Debt Settlement" are:

Credit Repair

Credit Repair is the process when you legally dispute items on your Credit Report with the three Credit Bureaus (Equifax, Experian, and TransUnion) or the Creditor/Collection Agency with the hopes they will remove the Account from your Credit Report.

Multiple methods can be used when disputing items, such as Validation Techniques or Disputing a Reporting Error. The Account Type you are fighting for and the results you want will help you determine the tactic that will work best.

Debt Settlement

Debt Settlement is when a Creditor or Debt Collection Agency agrees to a settlement amount on your debt and, in return, you agree to pay the debt. Debt Settlement usually means you spend less than the entire Balance in exchange for immediate payment or a Payment Agreement. If you fail to pay or default on the agreement, the Debt Settlement Company/Creditor can cancel the deal and charge you various fees and penalties.

Which Process Works Best?

make a choice credit repair

Both processes have Pros and Cons in different circumstances, so determining which is "best" really means "best for this particular situation"? Most people don'tt realize that both processes can hurt your Credit Score if done incorrectly.

If your Ultimate Goal is to better your Credit Standing or Remove a Debt from your Credit Report, then both these processes can be viable options for you.

Let's discuss the critical differences between these processes, which will help you make your decision...


When it comes to comparing the two, which one is less expensive?

Credit Repair

Credit Repair, compared to Debt Consolidation, can be less expensive in the long run regardless if you hire a Company to help you with this or tackle it on your own.

With Credit Repair, you're not paying anything towards the debt; you are sending Dispute Letters to request the Account be removed. The only cost involved would be if you hired a Credit Repair Company or the time spent on sending the letters yourself (plus stamps).

Debt Settlement

Debt Settlement can be way more expensive than Credit Repair in the long run. You're paying your debt in its entirety, or a portion of it, in return for the Account to show as "Paid" or to be removed from your Credit Report.

Our Choice: Credit Repair

Unless there's a situation where you need debt to show as "paid in full" to be pre-approved on a loan (or another similar problem), Credit Repair will generally be your lowest cost option out of the two.


time credit repair

Which process takes the least amount of time?

Credit Repair

The process typically requires multiple rounds of Credit Repair (each game takes 30-45 days), and you counter the Dispute Response each time. In some rare situations, you could see results within the first 30-45 days, but that is unlikely. The average turnaround for fixing your Credit can be 90-120 days.

Debt Settlement

You can generally have a Debt Settlement together within a couple hours, but receiving the payment can take a couple of days. The Debt Settlement Process is usually done through the phone, which is why it doesn't take as long to complete the transaction. The average turnaround for Debt Settlement is 1-4 Days.

Our Choice: Debt Settlement

As mentioned before, if you're looking for the FASTEST option to get a debt resolved, then this is your best solution for a resolution.


Which process is the most effective?

Credit Repair

When an Account is removed from a Credit Report, it's permanent. This means the Account can never be placed back on a Credit Report. If done correctly, Credit Repair can be the most effective option available.

The reason a "deletion" from a Credit Report is so necessary is that the negative effect the Account has on your overall Credit Score is significantly diminished. Let's say you have a Charge-Off on your Credit Report, and its total negative impact on your Credit Report is 60 points. Once it's removed, you gain the full 60 points back. Therefore the removal of the Account is CRUCIAL.

Debt Settlement

With Debt Settlement, the Account is NOT removed from your Credit Report. Instead, the Balance Owed is just zeroed out to reflect No Balance on your Credit Report. Although changing the Balance on a Credit Report to "zero" sounds like a good thing, it really depends upon how much positive credit your Credit Report has that will determine if your scores go up or down.

Example: you have a $2,000 Collection on your Credit Report and only have one recently opened Credit Card as your positive supporting Credit. Since your active Credit Account is so new, and your Credit doesn't have a long-term open Account (of at least 4 years), the zero Balance can hurt your Credit more than it can help.

Our Choice: Depends On The Situation

The answer indeed varies with the situation. Since Credit Repair can remove the debt off your Credit Report, it will be MORE EFFECTIVE than Debt Settlement 70%+ of the time.

When a Debt Settlement Company agrees to remove the Account from your Credit Report entirely after settling the Account in total, this will only surpass Credit Repair in effectiveness.

On a side note...

Some Debt Settlement Companies have good relationships with some Collection Agencies and Creditors. Therefore they can sometimes get them to agree to remove Accounts off a Credit Report as a way to negotiate the Account. This is rare, though, since it's illegal for a Creditor or Collection Agency to remove an Account from a Credit Report after a settlement UNLESS it's a clerical error on their part.


family child kid credit

Is either of these solutions risky?

Credit Repair

There's no real risk associated with Credit Repair IF IT'S DONE RIGHT. And yes, it can be done WRONG. A common Credit Repair "wrong" is using an ineffective or overused Dispute Process, for example.

Let me explain this in further detail...

There are two common Credit Repair approaches.

Template-Based Letters:

Anytime you use a commonly-found-online, template-based letter, you risk using a letter that has already been flagged as frivolous.

The credit bureaus use a program called e-Oscar to scan in all Disputes received. One of its purposes is to flag Dispute Letters that have been used numerous times. Although the Credit Bureaus do not define how often a letter can be used before it's deemed frivolous, if the letter is on the internet, just assume it's been used way too many times.

Frivolous letters mean you are essentially "banned" from redisputing this Account for an entire year. A whole year. Although there's no rule or statement put out about this, it's been tested by numerous high-volume Credit Repair Companies. The unfortunate truth is that it's nearly impossible to get the Credit Bureaus to reinvestigate Accounts that have been flagged.

"Not Mine" Disputes

One of the MOST common Dispute Methods used when repairing Credit is the "not mine" dispute. It's exactly what it sounds like - you're claiming that all the negative accounts on your Credit Report are not yours. This may be true for some people, but this is not the case for most people or most Accounts. If you are found lying on the Dispute, the Creditor and Collection Agency can prove the Account is yours will be internal Bureau flags. This will definitely hinder you from disputing your Credit down the road.

The moral of the story, know what your "claim" is when disputing. There is no need to "lie" when fighting; I like to compare denying to playing poker; the one who shows their hand first...loses.

Debt Settlement

This can be VERY RISKY if not done correctly. If you're looking to boost your Credit Scores using Debt Settlement, you'll have to make sure to get the Creditor/Collection Agency to agree to remove the Account.

You should never agree to pay an Account without agreement because Debt Settlement Companies are notorious for saying one thing and doing another. Also, remember that paying a debt without it being removed can cause your scores to go down. So unless you need an Account to be settled so you can be pre-approved on a loan application, or you have it in writing that they agree to remove the Account from your Credit Report after it's paid, then Debt Settlement most likely will not be your best option.

Our Choice: Credit Repair

Credit Repair wins our vote on this one; it will save you money and headaches in the long run compared to Debt Settlement.

Let's go through common questions we get from Clients who are looking for Credit Repair or a Debt Settlement:

Can Debt Settlement be used on Active Open Accounts?

Unfortunately, yes. I say, unfortunately, because companies out there will do this, and it's just plain wrong.

They usually will not go through the process with you when you hire them, and they will tell you to stop paying the debt in its entirety. This will immediately cause your Credit Scores to TANK and your Account to enter a Charge-Off Status. Once the Account is in Charge-Off Status, the Debt Settlement Company can negotiate the Balance with the Creditor and help you settle your debt.

But this is precisely why Debt Settlement has such a bad reputation - some Companies do not have your best interests in mind, and they will tarnish your Credit to turn a profit.

Can Debt Settlement Cancel Credit Card Debt?

This depends on the status of the debt. No reputable Debt Settlement Company will try to settle your debts on Open Accounts if the Account is open.

Once the Credit Card debt goes into a Charge-Off Status, it can be negotiated to be removed from your Credit Report after payment, which would cancel out the debt.

How to Reduce Credit Card Debt

pay down credit repair

Honestly, getting rid of Credit Card debt is not easy. The best way to go about this is to transfer the debt to an Installment Loan, then make payments to reduce the deficit. The problem with this approach is that most people who need to reduce their Credit Card debt are struggling financially, and there's simply no easy way to reduce Credit Card debt unless you can pay it down naturally. Consider finding an odd job or an extra source of income to help you pay off your Credit Cards. I understand this is easier said than done, but if you are dedicated to getting it done and paying off all your credit card debt, you can make it happen and reap the rewards of BETTER CREDIT!

Best Credit Card Debt Restructuring Technique

During COVID, Credit Card Companies have been open to helping restructure your Credit Card debts based on your ability to pay your Accounts.

Refer to this article for more information: Credit Card Debt During Coronavirus.

For good-standing Credit Cards, the best restructuring technique is to pay the Credit Card down completely, then call the Credit Card Company and inform them you still want to be a loyal customer of theirs, but the Interest Rate on the Credit Card is too high, and you are seeking other options. In most cases, the Credit Card Company will reduce the Interest Rate or offer you different options or incentives that can help save you money.

How Does a Debt Relief Program Work?

Debt Relief Programs are essentially what Debt Settlement Companies offer, just dressed up fancy. They aim to relieve you of some of your debt by negotiating the Overall Balance to help reduce the out-of-pocket expense.

Best Credit Repair Technique

When you decide to take on Credit Repair, the # 1 thing you need to decide first is if you are going to devote the time to do the process yourself OR hire someone experienced to do it for you.

You must factor in the time it takes to do it independently and the commitment you will need to make to get it done correctly. You'll need to decide the best process to utilize to get the desired results you're looking for.

Check out this VERY detailed article on Credit Repair: All You Need to Know. It explains all the steps you'll need to take to send out an effective Dispute Letter that demands results.

If you're looking to hire a reputable Credit Repair Company, remember that 90% of Credit Repair Companies go about it the wrong way, and their goal is not to get YOU results but to turn a profit instead.

Always ask these questions when looking for a legitimate Credit Repair Company:

  1. Can you explain the Dispute Process in detail?
  2. How much do you charge on average for your services?
  3. Do you offer a Money-Back Guarantee?
  4. Are you Licensed and Bonded?
  5. Do you dispute ALL my negative accounts at once, or how many do you disagree at a time?
  6. How long does the average client service take?
  7. Do you guarantee permanent results?
  8. Do you have any client testimonials you can share with me?

If you do not have the time to interview different companies, contact" target="_blank">ASAP Credit Repair. They are straightforward, affordable, and customize ALL their Disputes, which allows them to provide an industry-high success rate of 73%.

Please leave any questions or comments below! I respond to all comments and would be happy to help you personally!

Comment Section May 13,2024 05:05 pm
eum nisi reprehenderit labore fugiat nemo. et aut sit illo dolorem nisi sunt.
ZAP Feb 21,2024 03:02 am
Zaproxy alias impedit expedita quisquam pariatur exercitationem. Nemo rerum eveniet dolores rem quia dignissimos.