Credit repair is reviewing your credit report and challenging items that are inaccurate, unverifiable or outdated. Debt settlement is negotiating with a creditor to accept less than the full amount you owe. Credit repair focuses on the accuracy of your report, while debt settlement resolves a specific debt and can have tax and credit consequences. The two are governed by different federal rules.
No. Accurate and verifiable information generally cannot be removed just because a company asks. The Credit Repair Organizations Act prohibits credit repair companies from charging fees before the promised services are performed. You also have the right to cancel a credit repair contract within three business days.
A settlement company, or you on your own, negotiates with creditors to accept a lump sum that is less than the balance. Settled accounts usually appear on your credit report as settled for less than the full amount. Forgiven debt can also count as taxable income, so talk with a tax professional before you settle.
No. The Federal Trade Commission's Telemarketing Sales Rule bars debt relief companies from collecting fees until they have settled or reduced at least one of your debts and you have made a payment under that agreement. Check for these protections before you sign anything. Consumer information is available at consumer.ftc.gov.
Yes. You can dispute errors with each credit bureau and negotiate with creditors on your own at no cost. A nonprofit credit counseling agency can also review your debts with you. This page is general information, not legal or financial advice.
Last reviewed October 15, 2026 by Sandra Ruiz, CEO.
Start with a free consultation and a general review of your credit scores from the three bureaus. Individual results vary.