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During the last few decades, millions of people took advantage of the loose lending practices offered by banks and credit card companies. Now, with so many people un or underemployed, paying back that debt has become an overwhelming task. Even those who have had little change in their finances are often consumed by their debts, the interest rates, and excessive fees charged by lenders. Many need to know whom they can turn to for help with getting their debt under control and getting out of the red.

You have several options that can help ease the burden of repayment, and each option depends on your particular circumstances. You can take matters into your own hands and deal with it yourself, you can get help from a debt management company, or you can use debt consolidation. Questions you need to ask yourself are, how far in debt are you, is it something you can handle on your own, how much are you willing to pay for help, and what kind of hit can you afford to take when it comes to your credit rating?

To take care of your debt on your own, it will be up to you to contact your creditors and a make repayment plan. They may offer you settlement arrangements, which could cut the amount you owe by up to 50%. While this can have a negative impact on your credit report, it’s better than bankruptcy and can shave thousands of dollars off your debt. The money you save can be used to pay other debts and speed up the debt repayment process.

A debt management company can be a great tool to get debt under control. A debt management company will examine your finances and create a DMP, or debt management plan for you, contact your creditors for you to work out a repayment plan, and help you determine an amount you can pay each month for your debts. This amount will go either into a special account or directly to the debt management company to pay on your behalf. Fees charged by debt management companies vary and some are less than reputable, so be sure to research the company and examine any agreements they offer.

A debt settlement company will work out settlement arrangements with your creditors, and can usually negotiate a better settlement than you could on your own. The drawback is that they will generally charge a fee based on your amount of debt. When choosing a debt settlement company, try to find one that does not charge fees until the end of your debt repayment, one that can stop your creditors from calling you, and one that is accredited and listed with the Better Business Bureau.

If you use a debt management company, they will usually provide counseling services to teach you good budgeting techniques. If you don’t, take some time to examine your income and make a livable budget to keep you out of debt in the future.

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When it comes to the question of whether or not you need professional help with your credit repair, there are a lot of pros and cons to both sides. Let’s pick the question apart some. It’s not always a clear matter oi right and wrong; it just depends on your unique situation and how much money you have or don’t have and how much time you have or don’t have.

The “pros” of doing it through a credit repair company are pretty obvious:

1. You don’t have to figure it out.

2. You just have to do what you are told.

3. If you do it with a reputable company, you will save time and some peace of mind

The downsides of doing it with a credit repair company are also pretty obvious:

1. It can be expensive: $600 – $1500.

2. The work they do is quite basic and you might feel ripped off at the end of the day.

3. You still have to put in a fair bit of work when you go with a company. Even though you don’t have to know why they will ask you to do what they ask you to do, they will probably explain it and when you realize how simple it is, again, you may feel ripped off.

4. They will probably only spend about a couple of hours actually working with/for you. Again, you might feel ripped off.

5. They typically bill monthly so they are not under pressure to get your credit repaired fast, because as soon as you are satisfied, you are no longer their customer.

The benefits of doing credit repair by yourself are as follows:

1. You will save a great deal of money.

2. You will learn something.

3. You will find that it really isn’t difficult.

4. There are free tools and info online that you can easily access.

5. There are forums on the web where you can ‘talk’ to people who have done it before.

The downsides of self credit repair are as follows:

1. It will take you some time.

2. You might not be sure if you did everything correctly.

3. Your letters could be rejected if you do it incorrectly.

4. You could lose the time you put into it and end up going with a credit repair company.

In the end, either way is good as long as it is done right. If you start working with a bad credit repair company, then you stand to lose a lot of money for no result. This happens. On the other hand, if you do it on your own and you don’t do it right, you will burn a lot of your time. You need to decide what is more valuable to you in the long run, your money or your time, and which you can more afford to invest in the credit repair endeavor.

If you have had serious credit issues but have managed to get through them by doing credit repair, then you need to start building positive credit. You can do this in a couple of ways. If your credit repair efforts were successful, then you should be much happier with the looks of your three credit reports now. You should not have as much ‘derogatory’ credit on your reports. Accounts should have been corrected or wiped away if you repaired your credit properly.

Now your goal needs to be building new credit. This will become very important if you ever want to purchase something ‘on credit’ again. This situation will not resolve itself. You must build credit so that you will have a credit profile that an underwriter will consider. If you don’t do anything for many years, then down the road there will be nothing on your credit report and you will still be considered “high risk” because the underwriters will have no way to judge you. Sometimes underwriters will look at your bank accounts and utility bills and your auto insurance bills to see if you make timely payments. That info can help them decide whether or not to extend credit to you, but you will still be considered high risk and therefore will not qualify for the better loans. High risk loans have high interest rates and high fees attached to them most of the time. You would do well to avoid those kinds of loans because you won’t be able to pay them down very quickly. You might even end up ‘up side down’ on your car loan if your interest rate is 25% for 6 years. Don’t ever put yourself in this situation. You are better off picking up an old beater and paying cash for it than you are getting into a high risk car loan.

There are two standard ways to build credit: 1) credit cards, and 2) small secured bank loans that report to the credit bureaus. Whatever you do, make sure the loan you get will report to the credit bureaus. If it doesn’t, you are wasting your time. There are a lot of ‘second chance’ credit cards available. Yes, you are going to have to pay for them in some manner. Just be sure you keep the balance paid off and use them sparingly. Never think of a credit card as free money. They certainly are not free money.

You might be able to get a small loan from your bank if you have a car title or something else of value to offer them. Be certain they report to the credit bureaus. This is really important.  This is a good way to approach your bank: Tell them you will keep the money that they loan you in an account at their bank and you will use that money to make the payments. Get a 12 month loan. If it is $500, they could even charge you 25% interest and it would not cost you that much per month, and you are buying back your credit! You will just have to ‘suck it up’ a bit. In the end though, when you have rebuilt your credit, you will be glad you did!

To get the most out of your credit repair process, you need to time your credit repair efforts properly. This might not be something everyone can do because most of the time people simply need to get it done because they have put it off for far too long. So, as a rule of thumb, the best time to fix credit is NOW. Just get it done.

But if you have a large amount of outstanding collections and old bad debt, you could do yourself some favors. If the debts are really old, then you might not want to dispute them because after 7 years of no activity, they should just go away on their own. Disputing the accounts could actually reactivate them. Paying those old accounts could also reactivate them, thus giving the creditor more time to keep reporting them against you. If the accounts have a zero balance, then you should dispute them because removing old zero-balance collections from your report can and will greatly improve your credit profile. Do NOT hesitate to dispute collections or bad accounts that have no balances on them. Generally, creditors won’t respond to that kind of dispute since you don’t owe them anything. Then, when they don’t respond, the account is deleted and that is a good thing for you.

If you have small debts that you can pay off, you ought to go ahead and pay them off. Right after you pay them off, go ahead and dispute them. You could well get lucky and the creditor might not respond to the dispute since they will see that the account has been paid. Or the creditor may update your balance to zero more quickly than they would otherwise have done.

If you are in the middle of a bankruptcy, don’t do credit repair until it is discharged. If you are paying on bad debt, don’t do credit repair until the accounts are paid in full. If it is a judgment you are paying on, don’t dispute the judgment until you have completely paid it off.

If you are interested in an online tool that can help you create your credit repair letters in a matter of minutes—for FREE—check out the Credit Repair Letter Wiz™, which can be found at http://creditblossom.com/Content/LetterGeneratingTool.aspx .

Nearly all people who go through a bankruptcy are told by their lawyer that their credit report will take care of itself or that the lawyer will take care of their credit report for them. Rarely does this turn out to be true. Most of the time, a bankruptcy will leave lingering items on your credit report for years and years. Many times creditors will continue to report on accounts that were rolled into a bankruptcy and this is absolutely not legal. Frequently, those creditors will just fail to update the accounts to show a zero balance. This too is illegal.

As far as credit repair goes, repairing your credit after a bankruptcy is really one of the simplest scenarios you could be in. The process is simple: you need to write credit dispute letters for everything you included in your bankruptcy. Why? There are two reasons: 1) often the creditor will not respond to the dispute since you don’t owe them anything–this causes the account to be deleted; and 2) because it is usually the case that the creditors are reporting these accounts incorrectly. The second reason is the reason that gives you the right to dispute the account. The first reason is the big benefit to you.

If a large number of accounts were included in your bankruptcy, then you will have quite a few credit repair letters to write. This can be a pain, but it is well worth your time. You could pay one of the thousands of credit repair companies, but if you consider what these companies really do compared to how much you will have to pay, you will probably feel like you’re getting ripped off. As with anything else, you have to look at your whole situation. Can you afford 3 hours of time to save yourself $600 – $1000? If so, you should look into doing self credit repair. Especially in the case of a bankruptcy where it is a simple matter of mailing out one wave of credit dispute letters, self credit repair is really the best option–and it can be done for only the cost of the postage you’ll buy to mail the letters.

If you’re interested in using–for FREE–an online credit repair tool that will help you create your credit repair letters in a matter of minutes, you can access it, along with video tutorials explaining how to use it, through my website, listed below.

Matthew Wierzbinski is the owner of http://CreditBlossom.com, which offers both written and video instructions on how to repair your own credit. It also offers the public free use of its amazing credit repair letter generating tool, the free and easy Credit Repair Letter Wiz™, which can be found at http://creditblossom.com/Content/LetterGeneratingTool.aspx .