The two most common are Credit Repair and Debt Settlement. Both have their advantages and both certainly have their drawbacks. Before you choose either, you have to understand how each works and which program fits your personal needs.

Debt Settlement works well for some and can reduce larger debts to as much as 60 percent. Two of the major drawbacks are the fees charged by debt settlement companies and the damage it does to your credit score.

The average fee is 15 to 20 percent of the total debt and many debt settlement companies charge an additional fee based on the amount of money they save you. The net result is under this model is not nearly as significant as it may appear on the surface. The second problem is complete destruction of your credit score.

Debt settlement programs once negotiated with your creditors require you to save money until the agreed upon amount is saved and then you pay them off. What most debt settlement, or negotiation companies don't tell you is that your accounts are being marked late each month while you save.

Then there is credit repair. If you're lucky enough to find a legitimate credit repair company, the fees will be much lower then that of a debt settlement company. Credit repair can be effective for removing some of the negative trade lines. The problem is that it is most effective for older, smaller items e.g. smaller collection and charged off credit cards.

For the larger debts, chances are credit repair won't do much because creditors want their money and will eventually get it and usually through lawsuits and judgments.

Is either a perfect solution? Probably not, but each has it's advantages depending on your personal situation. Perhaps the most effective solution is a combination of both. While most companies don't offer a credit repair/settlement program there are a few that do.

The advantage of combining the two is that debt settlement can reduce your payments giving you the immediate relief you need, while credit repair can help mitigate the damage to your credit score.