Credit Repair vs. Debt Relief: What’s the Difference?

July 26, 2017

Credit repair and debt relief can be sticky situations, and both may have long-term effects on your credit score. Which is why it’s so important to do your research, and weigh all of your options and decide what’s best for your situation. 

Although credit repair and debt relief sound similar, they’re actually very different. A credit repair service, also known as a Credit Service Organization (CSO), is hired specifically to improve your credit score, history, or rating. A business may also be considered a CSO if they help you get a loan or other form of credit.

In California, CSOs are required to be registered with the Attorney General and hold a $100,000 bond. They also have to give you the company’s address that issued the bond, and how to go against the bond if they violate any laws. You have five days to cancel your contract with a CSO. Read more about CSOs and their exemptions here.

Debt relief services are hired, for a fee, to assist you with debt settlement and negotiation. In some instances they may instruct you to stop making payments, and as a result your credit score could actually lower. They are not required to registered or bonded. More about those here.

Whether you choose a credit repair service, or debt relief service, here are a few things to keep in mind: 

1. Do not make payments in advance. It’s illegal for both of these types of businesses to collect fees before services are performed.

2. Learn everything you can about the business. Start at and check out the company’s rating, and reviews. Remember that BBB Accredited Businesses adhere to our eight Standards for Trust. Also ask the business for three references; if they can’t provide references, they may not have qualified references to give.

3. Get all agreements and offers in writing. Pay close attention to your contract and ask questions about anything you don’t understand. Be sure to keep a copy of the contract, and any payments that you have made, for your records.

4. Know how to spot the scams. Be wary of anyone soliciting you over the phone and asking you to make payments via wire transfer, prepaid debit cards, or gift cards. Legitimate businesses will never ask you to make a payment in this method. Report scams to

To learn more about how you can become debt free, visit our consumer tips articles for hiring a credit repair service, or debt relief service.                                                                                                

By Danielle Spang

Disclaimer: Views expressed on this Blog are those of the individual author and do not necessarily reflect the views of BBB Serving Northeast California.