Some companies suggest that debt consolidation may improve your overall credit score, but as a strategy for credit repair, debt consolidation may not be the best choice. According to Fair Isaac, the company that invented the FICO credit risk scores that lenders use, there are many factors which affect your credit score. These factors must all be considered before taking out a debt consolidation loan, particularly if your hope is to achieve a higher credit score.

A credit repair debt consolidation strategy assumes that monthly payments on credit card balances are unaffordable and therefore causing occasional late payments. FICO says that payment history accounts for about 35% of your score. They also say that delinquent payments can have a “major negative impact”. So, if a debt consolidation loan will help you to make your payments on time, then it could be a good thing.

FICO also says that simply moving around the balances on your credit cards and closing unused accounts will not improve your credit score. They suggest that you pay your bills on time and work towards paying off balances on revolving charge cards. So, for purposes of credit repair, debt consolidation might help if you are able to pay off credit card balances faster. This will all depend on the individual and the specifics of the debt consolidation loan.

If you are considering a credit repair debt consolidation loan, be sure to compare fees and interest rates among different companies. While multiple inquiries affect your credit score negatively, inquiries made over a short period of time, generally within a 30 day period, are only counted as one inquiry. This is a recent change made by FICO with the understanding that consumers now “shop” loans.

To achieve credit repair, debt consolidation is not your only choice. FICO suggests that you check your credit report for inaccuracies and report those to the applicable credit bureau. If you have a history of late payments, but you are now current with a specific lender, you may be able to have the lender remove those items from your credit report. Sometimes they will do this just to satisfy a customer.

Many companies suggest other methods of credit repair; debt consolidation may or may not be the best choice for you. A law firm that specializes in credit repair can give you the most accurate information and the best suggestions for your individual situation. For more information about credit repair, debt consolidation and other credit issues, visit the Credit Repair Blog.