Will balance transfers to other credit cards effect credit score?

Answer 1

Yes, BTs can affect your FICO credit score.

30% of your FICO score is credit utilization: what percentage of your credit limit is used up by your balance? You can hurt your credit score if you are using more than 30% of your credit limit on any one revolving account. They also score you on total of all balances as a percentage of total of all credit limits. So, (1) leave open the accounts FROM which you transfer: they'll benefit your total utilization. (2) Know your credit limit on the account TO which you transfer balances: you will hurt your score (individual account utilization) if the balance is more than 30% of the limit.

Beware of the dreaded Universal Default clause. If you were to transfer money from high interest card A to low interest Card B, and lower your FICO score because card B gets over 30% utilization, AND card C has a Universal Default clause in its Terms & Conditions (i.e., the fine print), card C can raise its interest rates to the extremely high Default rates, even though you have excellent on time payment history with card C.

15% of your FICO score is length of credit history: Do not close the oldest cards FROM which you transfer money, or you can shorten your history. Read your credit reports, and look for Date Opened, to be sure.

10% of your score is credit mix. There are 4 good kinds of credit: mortgage, secured auto loan, major credit card (MC, V, AmEx, Disc) and store card (Home Depot, Macy's, etc.). The bad kinds of credit are payday loans, personal finance lines of credit for cash advances, and overdraft loans. Transfer money out of the bad kinds of credit accounts, they usually have the highest interest rates, too. Do NOT close the last account in any of the 4 good types of credit: you'll be shrinking your variety of good credit. Ideally you want one account of each type of good credit.

10% of your score is inquiries. You'll get a hard inquiry of your credit history for each credit card you fully apply for, so keep these inquiries to a minimum: you lose a few FICO points each, but you get them back over the next two years.

The last 35% of your score is payment history: pay every account on time, every time, not a single miss. You do NOT score extra points for carrying a balance and paying finances charges. For max points, they want to see you pay on time EVERY month, but you can do that WITHOUT paying finance charges by making a new, small, necessary purchase each month and paying your balance off in full each month. TransUnion breaks out your payments month by month for up to 48 consecutive months. On a credit card tradeline, a string of 48 consecutive boxes saying OK is a beautiful sight to a mortgage or other lender. Equifax counts the number of months your creditor reports, up to 99 months (8 years, 3 months). So build that history!

Please vote: Did this help?

Answer 2

Yes. One big factor in your credit score is the age of the longest account in your file. Suppose you have the following two scenarios:

1) $1,000 balance, max credit line $2500, opened 8 years ago.

2) $1,000 balance, max credit line $2500, opened 6 months ago.

The former is going to be MUCH better for your credit score than the latter.
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Furthermore, opening and closing a lot of accounts within a short period of time can have a negative influence on your credit score, even if they are closed with a zero balance.

The occasional balance transfer to a card with better terms is not a bad idea, but you should keep an eye on the big view.

Answer 3

It can. We need more explicit details to truly know how this will effect your score. It should be ok though.

The biggest credit score factor is making EVERY PAYMENT ON TIME. Do that and you are worlds ahead of most. Even if it's the minimum payment, at least get it in on time.

As far as your question goes... don't close your accounts that you transfer the balances from. Even if you don't use them anymore, keep them open. The longer your relationship with the credit issuer, the more your score will go up with time.

Answer 4

Most balance transfer offers are good for only the first 6-9 months of enrollment. At the conclusion of the introductory rate, the card will convert to a more standard rate, typically between 14-20%. It is important that you determine what the interest rate is going to be once the intro rate is over. If you are not sure what interest rate the card is going to be charging at the conclusion of the intro offer, call the issuer and find out. Read more abot credit card balance transfers at: http://www.card-gallery.com/article/173,Credit_Card_Balance_Transfer_Tips

Answer 5

The net score is increased or not affected.

Your score will go down slightly for opening a new card, but it will increase more for having a 0 balance on your other cards.

Answer 6

Yes, they do. Credit bureaus keep track of many aspects of your personal financial transactions.