A growing number of banks, credit reporting companies and other financial services providers offer interactive credit scoring tools
If you’re unsure of how to improve your credit score, you no longer need to play a guessing game trying to figure it out yourself.
A growing number of banks, credit reporting companies and other financial service providers now offer interactive simulator tools designed to shed light on the once opaque credit scoring process.
The customizable tools help users zero in on the weaknesses in their credit scores and identify concrete steps they can take to improve their scores.
A new tool unveiled this summer by FICO, for example, helps take the guesswork out of overhauling a credit score – or fine tuning it to perfection – by providing consumers with step-by-step, customized instructions.
FICO Score Planner provides roadmap to your ideal score
Unlike most credit score simulators, the new FICO Score Planner doesn’t just predict what will happen if you take a specific action, such as reduce your credit card balances or increase your credit limit. It also analyzes the factors that are weighing down your current FICO score and provides a customized roadmap for achieving your ideal number.
For example, if your credit score is just under 700, but you need at least a 740 or more to get the best mortgage rates, you can input your hoped-for number and receive specific instructions for reaching that score. If you’re on a deadline, or are hoping to buy a house or a new car within a year or two, you can also specify when you want to reach your goal. That way, you know just how aggressive you need to be to meet your target score.
See related: 16 things that don’t hurt your credit score
The detailed information is a big departure from previous years when FICO was much more circumspect about its scoring model and how affects consumers. Until 2013 (the year when Discover became the first card issuer to offer free FICO scores), consumers who wanted to know how they measured up couldn’t even get a FICO score without paying nearly $20 for it. Meanwhile, the small amount of information about FICO scores that was available was relatively general.
Now, consumers not only have access to free FICO scores through a number of banks and credit card issuers, they can also get personalized advice without paying for a coach or visiting a credit counselor.
According to FICO, its latest credit simulator tool helps fill an important gap for cardholders who have just a vague idea of how their actions impact their long-term credit.
For example, “most people know that having a higher credit score is a positive thing as it can help increase access to credit at more attractive rates,” writes FICO’s Tom Quinn in a blog post about the Score Planner. In addition, people who pay attention to their credit scores are often well aware of the factors that can dampen their scores, such as carrying too much debt or applying for a lot of credit at one time.
However, “what’s less intuitive is knowing what potential actions they could take to reach a target credit goal by a target date,” writes Quinn. “For example, if someone currently has a 695 FICO Score 8 based on Experian data and wants to increase that score to 725 in six months so they can apply for a credit card, how would they know if that target score was even possible or what actions could be taken to potentially achieve it?”
FICO Score Planner is currently only available through Experian’s CreditWorks Premium Service for $4.99 for the first month and $24.99 a month after that (you can cancel anytime if you are not satisfied). But according to the Washington Post, it will soon be rolled out more widely among participating lenders. The scoring tool is available now in its pilot program.
See related: 18 things that hurt your credit score
Other tools provide a window to your financial picture
Meanwhile, other banks and financial services providers have launched their own credit scoring simulator tools designed to help consumers better understand their scores. Some lenders, such as Deserve, are even building proprietary apps that coach consumers in real-time and provide customized advice for improving their credit.
The tools offered by most financial service providers aren’t as sophisticated as FICO’s latest credit education tool. But they do give consumers a valuable window into their finances and the actions that affect them.
For example, the new MyCreditGuide simulator from American Express allows users to key in potential scenarios – such as reducing your credit card balances by a certain amount or increasing your credit limit – and see how those actions would affect their current score.
The simulator also allows you to forecast what would happen to your score if you opened a new account, canceled an old card, acquired a tax lien or made some other score-damaging move.
AmEx’s tool is similar in functionality to simulators from other banks and financial services companies, such as Chase and Capital One.
Simulators don’t provide your actual score
The scores provided by these tools are typically just for education and so aren’t guaranteed to be the same numbers your lenders see. However, they should still give you a good idea of where you stand and what moves you can make to improve your financial future.