What Is a Credit Score Simulator?
A credit score simulator is a tool that estimates how certain credit decisions, such as applying for a new loan or increasing your credit limit, will impact your credit score before you make them. The main purpose of the tool is to help you better understand how your moves affect your credit and decide the best course of action.
How a Credit Score Simulator Works
Credit score simulators can work a bit differently depending on where you find them. Some credit score simulators will treat everyone the same way, for example, estimating the same cookie-cutter credit score change after a particular action regardless of what else is on the person’s credit report.
WalletHub’s credit score simulator is much more precise. You’ll enter information about what credit changes you plan to make, then the tool recalculates your credit score, with your selected change applied to your actual credit report. This allows you to accurately forecast whether your credit score will rise or fall and by how many points.
WalletHub’s free credit score simulator can show you what happens if you:
- Apply for a new credit card or loan
- Make or miss a payment
- Increase or decrease the balances on your credit cards or loans
- Increase or decrease your credit limit on your credit cards
- File for bankruptcy
- Have an account sent to collections
WalletHub provides your VantageScore 3.0 credit score based on the information in your TransUnion credit report. The simulated changes you see will apply to this score.
What Affects Your Credit Score?
Your credit score may change for various reasons. Knowing the factors that can have a positive or negative effect on your credit score allows you to make informed decisions about your credit.
Payment History: How often you pay your bills on time is the biggest factor affecting your credit score. Your credit score will likely take a hit if you pay bills 30+ days late.
Amounts Owed: This focuses on the total amount of debt you have and your credit utilization ratio, or the percentage of credit you are using compared to your overall credit limit. You could see a significant drop in your credit score if your credit utilization ratio goes above 30%. On the other hand, you may see your credit score rise if you pay off a lot of debt and get your credit utilization below 10%.
Length/Depth of Credit History: The longer your credit history, the better it is for your credit score. So, if you close one of your oldest credit card accounts, you may see your credit score dip.
Types of Credit Used: The types of credit you have, or your credit mix, can help determine your credit score. Having a mix of different types of credit, such as having both credit cards and loans, is beneficial for your credit score.
New/Recent Credit: Your credit report includes a record of how often you apply for new credit, such as a new credit card or loan. Your credit score may temporarily drop by around five points when you apply for new credit, though if you submit multiple credit applications within a short amount of time, it may drop even further.
Learn more about
what affects your credit score.
