Although everyone's socio-economic status and situation is different, almost everyone is in some sort of debt at any given time. This can mean small debts like credit card bills or in-store financing, as well as larger ones, like outstanding auto loans and mortgages. What this means is that almost everyone is dependent on credit, and without credit, many things you take for granted will become difficult. The key to your credit worth at any given time is the credit report maintained by the three credit bureaus. Once you fall into default, or miss payments to your creditors, each credit bureau will receive notice and you will find yourself saddled with a poor credit rating. Effective credit repair involves many different steps, and is particular to each individual's situation. A good solution for most people in terms of credit repair, however, is debt consolidation. One of the most important things in credit repair is to act quickly. Although your credit rating will become damaged as soon as you begin to miss payments to your creditors, it will get continually worse if you continue to do so. Many people get confused into thinking that credit is either "good" or "bad," and that once they get into trouble with a creditor, it's fruitless to try and rectify it. The opposite is true, however; so even if you are in bad standing with creditors, credit repair still requires that you pay off your debts as quickly as possible. The problem for most, of course, is that they typically don't have the money to pay off the debts. After all, 95% of the time, a person's economic situation is the reason for the missed payments in the first place. It is for this reason that debt consolation can be an excellent tool in repairing credit. It works by consolidating all of your debts into one loan. In other words, if you have multiple outstanding debts, you take out a loan from one company, use that loan to pay the debts, and then make payments only on that loan. What debt consolation achieves is flexibility in situations where debt is becoming unmanageable. Although you will ultimately owe the same amount of money, you could get a debt consolidation loan over a long term, so your monthly outgoing expenditures will drop. Most importantly, debt consolidation immediately puts you back on solid footing with your creditors, and ultimately bodes well for credit repair. Things won't be perfect, but your creditors will report that you have cleared up your debts, and so the process of credit repair can begin. Debt consolidation is an important tool in credit repair because it allows your status with creditors to change very quickly: you go from someone on bad terms with multiple creditors to someone on good terms with a single one. It allows you to stop the damage before things get out of hand, and gives you the breathing room you need to engage in credit repair. In this way, intelligent debt consolation can be a very valuable tool.