Simulator, is it accurate?

[Anonymous]

Hello all,
I am new to the forum but not new to my FICO. I was at 98% of my total rotating debt (credit cards) I got an alert telling me as much. So over 3 weeks ago I simulated what my score would do if I paid down the card balances and to my happy surprise it showed them all 3 increasing by an average of 35 to 40 points. but here we are a few weeks later and zero alerts saying my over all balances have decreased. I'm not about 85% or less. And the only alert I've gotten is another alert telling me how terrible it is and thaty scoreat be impacted negatively? **bleep**? my scores haven't changed since I was @98% so why would my scores drop if I have committed to paying down my balance and have done so. my revolving totals as far as available credit exceed $12k so a drop from 98% to 84% is like a $1500 + drop. whay am I not seeing the score increases that the simulator suggested so many weeks ago?

[Anonymous]

It's common for there be a delay of 3-6 weeks between paying a balance down and that new lower balance appearing on your credit reports.  So given that it's only been a few weeks, it's not strange that you wouldn't have received any alerts yet.

Although you say that you have received no alerts, you also write that you have received "another alert telling me how terrible it is and thaty scoreat be impacted negatively."  Unsure what that means.  Can you find the exact working of the alert and tell us what that was?

Your scores will get much better as you pay down your debt, though as I mentioned any benefit may be delayed by six weeks or so.  Improving your score should be a secondary benefit though.  The main reasons you need to be paying off your debt are (a) so that you won't be in debt (CC companies charge ruinous interest rates) and (b) to protect yourself against your CC issuers closing your cards.  To elaborate on (b), your 98% utilization placed you in a very high risk category and it placed the future of your cards in jeopardy.  

So your goal should be to pay off all your CC debt for the two reasons I mention, and then you'll also get a very nice scoring boost as a byproduct. 

[Anonymous]

Simulators are not at all accurate, so I would suggest not even using them.

A trip from 90%+ overall utilization down to 1%-8% overall utilization would yield somewhere in the ballpark of 100-125 points in most cases depending on profile.  That's how I would simulate your potential gain.  Taking down utilization half way?  Maybe half those points or a little less.  Scores only increase when thresholds are crossed.  Many believe these thresholds exist at or around 9%, 29%, 49%, 69% and 89%.  If you aren't crossing a threshold, you may not see a score increase.  For example, if you pay your 98% utilization down to 90%, that 8% paydown wouldn't result in any score increase at all.  If you were at 50% utilization, though, and paid down only 2%, you'd have crossed a threshold which would cause a score increase.  So, it's not the amount you're paying down, or even the percentage points that you're paying down, but rather the crossing of a threshold percentage. 

Paying down debt of course is always the best move, so as CGID correctly points out above regardless of whether or not your score is improving with every pay down, it's certainly a great financial move.

[Anonymous]

Thanks for your reply,
So what your telling me basically? Is that the Simulator is not to be trusted. Seems like a terrible prank to play on a family trying to buy their first house and they are somewhat trying to approximate a future score potential into a budgeted timeline, in order make and educated estimate.
What a let down ey?