accuracy of the simulator

Anonymous · ‎01-30-2016

I am new on the site (which I love so far). I was wondering if anyone has followed the advice of the best scenario that the simulator gives?

Bankrupt2019 · ‎01-30-2016

Mine said best action was to pay down X amount of dollars each month for 24 months.......I did it in 1 month and my score is 20 points higher than the estimator said it would be at the end of 24 months

Anonymous · ‎01-30-2016

@Bankrupt2019 wrote:
Mine said best action was to pay down X amount of dollars each month for 24 months.......I did it in 1 month and my score is 20 points higher than the estimator said it would be at the end of 24 months

Well, that escalated quickly.

Anonymous · ‎01-30-2016

that is certainly a good start!

The simulator tells me to pay about 150 ( 50 above minimum ) for 24 months and the score will go from 699 to 840.

Could that be possible...to good to be true..

Anonymous · ‎01-30-2016

The simulator is not exact in either time or score differences. But it gives you s general idea of what might happen. If you expect it to get the number of points right out predict exactly when your score will change, it won't do that.

Anonymous · ‎01-31-2016

When the simulator suggests that you pay your CC debt down gradually over 24 months (as a score improving strategy) here is what is going on.

The simiulator is likely comparing two strategies:

(a) Score value next month if you pay all your debt off today

(b) Score value 24 months from now if you pay all your debt off gradually

The funny thing is, strategy B will indeed give you a higher score. The reason is that smuggled into B is an additional benefit: all your accounts are also two years older. It wasn't the gradualness of the payments that helped. It was adding 2 years to your AAoA.

Thus the best strategy (if you can afford it) is A. Pay off all your cards now. Then use one card and make sure it reports a small amount.

Why don't these simulators ever suggest A? The programmers of simulators may be making a reasonable assumption: if a person has a lot of CC debt, then he can't pay it off in one month. If he could, he wouldn't be opting to pay a bunch of interest on his cards. Therefore the simulator doesn't even suggest A as an option.

I wish that simulators would always have an asterisk next to the 24 month recomendation that explains that a better strategy is to pay off all your cards now, if you can. I wish they did. But they don't.

Anonymous · ‎01-31-2016

@Anonymous wrote:
When the simulator suggests that you pay your CC debt down gradually over 24 months (as a score improving strategy) here is what is going on.

The simiulator is likely comparing two strategies:

(a) Score value next month if you pay all your debt off today

(b) Score value 24 months from now if you pay all your debt off gradually

The funny thing is, strategy B will indeed give you a higher score. The reason is that smuggled into B is an additional benefit: all your accounts are also two years older. It wasn't the gradualness of the payments that helped. It was adding 2 years to your AAoA.

Thus the best strategy (if you can afford it) is A. Pay off all your cards now. Then use one card and make sure it reports a small amount.

Why don't these simulators ever suggest A? The programmers of simulators may be making a reasonable assumption: if a person has a lot of CC debt, then he can't pay it off in one month. If he could, he wouldn't be opting to pay a bunch of interest on his cards. Therefore the simulator doesn't even suggest A as an option.

I wish that simulators would always have an asterisk next to the 24 month recomendation that explains that a better strategy is to pay off all your cards now, if you can. I wish they did. But they don't.

Thanks Credit Guy....Both my cards are under 1 year old and a car payment is at 20 months....So I guess the bump is for the aging process..

Buit I think I need a new card ...visa to go with my mastercard barclaycard. But I don't want to go backwards scorewise.

Plus...do you know if I will be dinged for a CLI?

Anonymous · ‎01-31-2016

julie5 wrote:

Thanks Credit Guy....Both my cards are under 1 year old and a car payment is at 20 months....So I guess the bump is for the aging process..

But I think I need a new card ...visa to go with my mastercard barclaycard. But I don't want to go backwards scorewise.
Plus...do you know if I will be dinged for a CLI?

You never get dinged for a CLI itself. (Remember CLIs are often handed out automatically by a credit card issuer.) Requesting a CLI, on the other hand, can trigger a hard pull of your credit report, and a hard pull can often cause a small score loss (it's also called a hard inquiry). But often a CLI request will cause the credit card issuer to do a soft pull, which has no effect on your score. So how can you find out which it will be?

This link may be a good place to start:

http://www.doctorofcredit.com/credit-cards/which-credit-card-companies-do-a-hard-pull-for-a-credit-l...

There are a number of good articles here as well:

http://www.doctorofcredit.com/?s=credit+limit+increase

And the most straightforward way to find out is to call your CC issuer and ask. They will know.

As far as adding a third credit card, there's a lot to be said for that. Before you apply I would wait until your AAoA is > 1, as well as to be sure that you have one card reporting at $0 and the other reporting with a smallish positive balance. If you are approved, then your score will likely go down but it will come back in a few months when your AAoA crosses back over 1.

Anonymous · ‎01-31-2016

Thanks again....I think I will just settle in the Garden and learn from the likes of you. The simulator says I will be at 840 if I pay equally over 24 months. So I can live with that!!!

Bankrupt2019 · ‎01-31-2016

@Anonymous wrote:
Thanks again....I think I will just settle in the Garden and learn from the likes of you. The simulator says I will be at 840 if I pay equally over 24 months. So I can live with that!!!

It's likely factoring in the drop in balances as well as the aging of any accounts and or inquiries you have. You will get an immediate result by dropping your balances and or raising your credit limits in a shorter amount of time.