I don't understand how the credit score simulator works

I don't understand how the credit score simulator works
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#1

The credit score simulator is giving me information that seems to be conflicting.

On the one hand, it’s telling me that getting a credit card with a $10K limit will raise my credit score by 40 points.

But then it’s also telling me that applying for a new credit card will cause me to lose 5 points.

Which should I do?!


#2

Thanks so much for your question!

First, here’s a bit of background about how the credit score simulator works: The simulator ingests information from your TransUnion credit report to provide some tips about which financial actions you might want to try and which you might want to avoid, based on your personal credit profile. You’ve probably noticed that you can play around with the values to in the simulator to see how changing the magnitute of certain actions might affect your credit. For example, taking on $20,000 of new credit card debt will cause your score to drop a lot more than $2,000!

The tricky thing is understanding how your credit will be affected in the long vs. short run, which is something the credit simulator doesn’t show you, exactly. In the example you provided, applying for a new credit card (or any type of new credit) will cause your score to drop temporarily by a few points. But in the longer run, you should see your credit score rise substanitally because you’ve increased your available credit and decreased your credit utilization ratio.

The important thing to remember is that the credit score simulator is only able to provide estimates - think of it as an educational tool, not an exact prescription.

Feel free to reach back out if you have any other questions!