What have you heard or know about credit scores?

Maybe you’ve heard in the news that Americans’ credit scores are down to an average of 666, according to Credit Karma data. A 666 credit score isn’t enough to qualify for a mortgage or get a decent credit card nowadays. The recession’s trends of tight credit, high delinquency rates on everything from mortgages to credit cards, and growing debt are symptoms of Americans’ poor overall credit health—and a falling credit score is the not-so-positive thermometer reading.

Maybe you know the basics to credit scores, that in this environment of harder-to-access loans and credit cards, a credit score matters now moreso than ever. A good credit score in the 720+ range is what it takes to get worthwhile offers and low rates on mortgages, loans, and credit cards.

So the big question at the center of every credit score article and blog post is a simple one—“how do I raise my credit score?” This concern is the core reason why any consumer becomes interested in their credit score—simply, to improve their score in order to unlock better financial options.

Most people don’t know, specifically, how to improve their credit score. There is a lack of consumer education around more effective credit management. They might read up on the general do-better basics—pay on time, pay down debt, get more credit. But generic advice could do more harm than good.

A Better Solution

Instead of using general advice, identify specific steps best-fit for your credit situation. The Credit Simulator, free from Credit Karma, lets you simulate specific financial actions so you can see for yourself how it will directly affect your credit score. It takes the guesswork out of figuring out how to build up your credit score.

Let’s take Consumer A, with a 721 credit score. Let’s take a look at her Credit Report Card (also free on Credit Karma), which is a snapshot of her credit report. It shows she has 100% on-time history, about 32% credit utilization (the recommended rate is 30%), over 15 months credit history, 4 total accounts, $17,016 in debt, and no major derogatory marks. She doesn’t know what action will best help her credit: maybe a new credit card or new loan, or perhaps an increased limit on her card.

The Credit Simulator shows that one of the best actions she can do is to pay off all her credit card balances, and get a potential boost of 35 points—bringing her to 756, which will get her the best possible options and lowest rates.

The Simulator also simulates negative actions on your credit score, so you can visualize how much one late payment or maxed-out credit card can damage your credit. For Consumer A, one late payment will drop her 24 points to a 697—considered fair credit, and limiting her options. Adding a few thousand dollars to her credit card balance plummets her credit score 65 points to a 656, which borders poor credit and cuts her off from most financial options.

The Bottomline

Improving your credit health is NOT about guesswork—on the contrary, it should be very specific to your credit needs or you could risk damaging your credit score. The Credit Simulator is free to use from Credit Karma, so take advantage of a perfect opportunity to boost your credit score in real and measurable ways.