Will transferring a balance hurt my credit score??

Question

I have two credit cards, one with no balance that is for dire emergencies and one that has a balance that will take at least a year for me to pay off. If I close out the one with a balance and transfer that balance to a card that offers a very low APR for the life of the balance, will my credit score be hurt??

Answer 1

Yes.
http://credit.about.com/b/a/007293.htm

Answer 2

Temporarily. Keep in mind balance -to- credit limit ratio is more highly weighted than the age of your accounts. So paying down a credit card is more important than how long you had or have the account open.

Also, people transfer balances all the time. It does hurt your FICO score a little anytime you open a new account, but since the balance on the new card will be dropping A LOT faster than on the old card, this evens things out.

Answer 3

If you are planning to open a new card, then it will hurt your credit score. It will also hurt your credit score if you close your existing account.

Every time you apply for credit, an inquiry shows up on your credit report. The inquiries stay on your report for 2 years, and each will have a small negative impact on your credit score. Having too many inquiries may even cause you to be turned down for credit, as lenders look at this when extending credit to you.

When you close an existing credit account, it will also have a negative impact on your credit score. Another thing that is factored into your credit score is the length of time your credit accounts have been opened. If you close an existing account, you will shorten the average age of your accounts, and cause your credit score to go down. If you do decide to transfer the balance from your existing card to a new card, you should keep the existing account open. You can set this card aside, but use it once every six months or so to make sure that it still shows as an active account on your credit report.

Answer 4

Assuming you have only 2 existing credit cards, transferring the balance from one to the other will cause a temporary drop in your score. In essence, it may appear as if you've racked up more debt on your 2nd card (in other words, it looks like you have large balances on both). However, in a few months, once the updated credit information makes it's way to the credit bureaus, you should be fine.

I don't recommend closing your account, especially if you only have 2 cards. Having too few accounts is actually bad for you, too!!! Keep it open and consider it as a backup.

In general, I wouldn't recommend more than 3 credit cards, and no less than 2. Credit scores are based on a formula that looks at all varieties of credit, so you'll want to keep a few of each type (ie. credit cards, secured loans, mortgages, etc.).

Answer 5

In general, yes. Closing a credit card even if it is at "consumers request" will lower your score. The best way to see is go to myfico.com and use their predictor service or go to MSN and they have a free service for credit card scoring. You can use both. However, If I were you. The prospects of closing only a one year card and yet getting a better rate of return (lower interest rate) would be worth it. However, here is another angle that you may not have thought of. Call your existing credit card company and tell them that you are looking to close the account and do a balance transfer but willing to stay with them if they can offer a more competitive rate. You'll be surprised. They may come close to or match the competitor's offer because it costs money to find a good client to lend to like you.

Good luck

Answer 6

Your credit score may go down temporarily when you open a new account (from new inquiry and the shortened length of average credit), However, in a long run, you will save a lot. You may don't want to close out your credit account immediately. Just keep it open for having a large credit available and having a long term credit account benefit your score.

Answer 7

It shouldn't cause it is a pre-approved credit line. I would however, check out a reputable credit bureau such as TRW and inquire with them. Call directory assistance for their 800 nbr. Dont trust anybody's opinion on here, its not worth screwing up your credit score.

Have a nice day:)