Contracting is what you do when you are looking to join a network with a payer such as Medicare, Medicaid, BCBS, CIGNA, Humana, United Healthcare, Aetna, or others. Basically, you are negotiating a reimbursable rate with that payer and are executing a contract so that you can be considered “in network”. Some payers will negotiate a percentage of reimbursement based off of the Medicare fee schedule and others might negotiate a global rate or a (flat rate) that all of your services get billed for.
Credentialing is what you do in order to get vetted with a certain payer. Basically, think of it like an application or background check. You are basically sending the insurance payer (BCBS, Aetna, UHC, etc) your license info, educational info and diplomas, board licenses, work history, etc so they can review your information and make sure you are who you say you are and you have never been banned from participating in a program.