Play the credit score what-if game

phrase credit score over shredded paper

What would happen to your credit score if you applied for a department store credit card? What if you made a late payment on your car loan?

Find the approximate answers with a tool called Score Planner at www.FreeCreditScore.com, offered by the credit bureau Experian.

The tool gives you an estimate of your credit score — more about that in a minute — and lets you see the impact of paying down debt or taking on more.

Using the site is free, but it peppers you with ads for things that cost money. Avoid these products.

To use the tool, click on the Score Planner link on the home page (it's the first listing below the heading "What You Get"). Then answer questions about your real estate loans, installment debts such as a car loan, credit cards and retail cards.

You'll be asked about late payments and the number of companies that have accessed your credit report — a sign you may be about to take on new debt. You'll also need to know the average age of your accounts.

What's in Your Credit Score?

Factor Percentage
Payment history 35%
Credit utilization 30%
Length of credit history 15%
New credit opened 10%
Types of credit used 10%

I knew the answers to the questions about how many credit cards I have and how many late payments I've made, because "one" and "zero" are easy to remember.

But I didn't have a clue how many companies have looked at my credit report recently. I didn't know the average age of my loans, either.

Who memorizes stuff like that?

To get this information, I went to AnnualCreditReport.com, which also offers the chance to pay money for services I think are of dubious value. But it also gives free access to your credit reports from the major credit bureaus, a service you should utilize regularly.

Seeing my credit report was easy, and the information I needed was simple to find.

After plugging in my data on the Score Planner tool, it spit back my Experian "Plus" score, which isn't a score that lenders actually use to decide whether or not they'll offer you a loan.

But it's a decent stand-in, and it lets you see trends and overall effects pretty clearly.

My "Plus" score: 796.

That makes me a very low-risk borrower, one who is likely eligible for low interest rates.

But here's the fun part.

Score Planner lets me play around with the numbers, checking some what-if scenarios.

For example, I could carry a $5,000 credit card balance and ding my credit score by only three points, taking it to 793.

Carrying that sort of card balance would be silly, because it would cost a bunch of money in interest, but it's nice to know that it wouldn't kill my credit.

A $10,000 credit card balance would hurt a little more, taking my score to 783.

When I tell the tool I've been repeatedly late in making loan payments, however, my score drops by nearly 100 points. An account that's currently delinquent was worth 50 points. Missing my next mortgage payment would decrease my score to 721, a 71-point loss.

New debt would also decrease my score.

Accepting a preapproved card offer, for instance, costs me 20 points. A new mortgage drops my score by 33 points. Maxing out my credit cards takes me to 750, a 42-point drop.

Being a perfectionist, I immediately wanted to know why my score was 796, not the maximum of 830. After all, I've kept my financial life pretty tidy.

The answer to that lies in the conundrum of credit scores.

In order to have a score at all, you must borrow money.

Pay it back on time and your score is good; pay it back late or not at all and your score isn't so good. The very fact that you have borrowed money, though, means that there is a loan that would compete with future loans for repayment — and that means that your score is no longer perfect.

In other words, it's nearly impossible to have a perfect credit score, on this site or anywhere else.

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