Credit Simulator: What is it, where do I find one and why is it helpful?
Find out why this new credit score simulator tool could help you avoid many headaches in years to come.
Have you ever found yourself regretting a financial decision you made years ago because you didn’t know the impact it was going to have in the long term? Or have you ever wondered why you took out yet another credit card without considering whether it would lower your credit score? If you answered yes to these questions, you’re definitely not alone, but there are ways to avoid regret in the future.
This is why tools like the Credit Score Simulator have been created.
What’s a Credit Simulator and How Does it Work?
Companies such as TransUnion, one of the three largest United States credit bureaus, offer credit score simulators that show you ways your current credit score would change based on future actions and events. This is great to use when you’d like to find out what would happen if you:
- Get a new personal, vehicle or home loan
- Transfer balances to a new card
- Have a credit application denied (don’t let this happen! Click here to find out why you should pre-apply first)
- Open a new credit card
- Close your oldest card
- Get a limit increase
- Increase or decrease your balances
- Let your accounts go past due
- Wipe out your late payments
- Go into foreclosure
- Have your wages garnished
- Have an account sent to collections
Even though, as Credit Karma Credit Score Simulator explains, this tool is not meant to predict or guarantee any future scoring changes, it is a great educational resource to explore, adjust and ponder your score.
So How Can I Get Started?
You can access the Credit Score Simulator through Credit Karma, or directly through the TransUnion website:
Once you’re in, you can start evaluating different scenarios, like what would happen if you get a new loan for a specific amount:
Play around and try different behaviors that you are likely to take on in the future, like getting a new credit card or applying for a loan:
You can also find out which loan you should try to pay off quicker in order to increase your credit score the most:
Remember that when it comes to credit scores, every scenario is different for each person. For example, the higher the scores, the more points you may lose when bad things happen and the longer it can take for the scores to recover, so it’s important to simulate based on your own report, and not make uneducated decisions based on guesses.
Knowledge is Power!
Once you’ve simulated multiple scenarios with the tool, don’t let this information go to waste! If you find out that late payments or a new credit card could hurt your score, make sure to take the appropriate steps to keep your credit score from falling. This tool is a great way to get a better understanding of what actions impact your score the most and how to be responsible and avoid hurtful financial decisions. Just keep in mind that these are estimated outcomes and not predictions.
LendingPoint is a personal loan provider specializing in NearPrime consumers. Typically, NearPrime consumers are people with credit scores in the 600s. If this is you, we’d love to talk to you about how we might be able to help you meet your financial goals. We offer loans from $2,000 to $25,000, all with fixed payments and simple interest.