How Does a Large Balance Transfer Affect My Credit Score? - Credit Card Insider

Today's question is: How does a large balance transfer affect my credit score?
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Many credit cards have introductory balance transfer offers that are quite cheap. You'll need better credit to qualify for these cards. What happens to your credit when you open a new card and transfer one or more balances onto it?
Every week, John Ulzheimer answers YOUR credit questions. Email us, give us a call, or ask on live chat, and we may answer your question on KZbin!
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[@funlatindude]

Am I the only on that noticed this??? How is it that the utilization ratio stays the same? You just increased your credit limit with a new card. If you have a new credit card then you have new high credit limits (i.e. your total credit cards limit). Your debt hasn't changed but your credit limit did. Shouldn't your utilization ratio be lower and not the same as you claim?

[@ilovemykittytravis]

This was super helpful in my current situation. Thank you so much for creating this video.

[@Day1Million]

Great video! Answered all my questions

[@mist__4974]

I disagree with not using the other cards after transfer. You lose out on perks like points and miles accrued. As long as you pay the balance each month then 💯

[@thebardock6785]

I think the idea is to prioritize paying your debt off rather than perks because it can be tempting to use the card with 0 balance again. By doing that your adding to your debt and it's unnecessary unless you use it like cash and pay that off with Money you actually have in your budget for gas groceries.

[@wrongsend7106]

Simple explanation is all I need and he nailed it. Thank you for your awesomeness 😎

[@SlyDellian]

Hey! I miss seeing new videos from you guys! Hope to see more soon.

[@jeffersonmarquez9437]

I have been a customer for 16 days. During the course of that time I had EVERYTHING on my credit report removed. Over 70 negative items. I would highly recommend to those trying to rebuild their credit. ( MASTERCREDITFIX at GMAIL dot COM )

[@kimberlylopez8530]

I been sent 2 offers from a credit card that I’ve had for 7 years for a transfer balance. One is for 0% for 10 months and the other is 0.99% for 15months, both have a 3% charger for the transfer fee. Would this be something good to transfer my debt to even if I have to pay to have it transferred? I’m trying to pay down my debt as fas as possible. I have a 11,500 limit on the card and I would put 10,500 on it. Would this hurt my credit more in doing so since the card will be maxed out. All my other card are not close to being max out but as I said before I just want to eliminate at my outstanding debt.

[@Creditcardinsider]

Depending on how quickly you can pay off the debt, it may be worth it, even with the fees, since you're likely paying a lot in interest charges each month with that much debt. Higher utilization, and the possible temporary lower credit scores, may be worth it to save the money on interest, and as you pay it off you'll likely see your scores go back up. This page explains more about utilization: www.creditcardinsider.com/blog/how-does-the-credit-card-utilization-percentage-impact-my-credit-score/ And this page explains more about balance transfers and their affects on credit scores: www.creditcardinsider.com/learn/balance-transfers/ - John G

[@linelevelmedia7357]

Great video, very informative. Thanks so much!

[@undecidedlady79]

Thanks came for one quick answer and learned a lot more!

[@AKOATZIN]

Me too just know that I have time I’ve been giving away my money too busy working

[@stephenlacher587]

Credit age may be looked at in tiers, i.,e., 1-3 years, 4-5 years (as an example). if the new card does not affect the average age enough to change the tier, it likely won't affect your score. It will, however, slow you from reaching the next tier.

[@munah9741]

Perfect explanation 👌 👏

[@stevestone5569]

Really helpful! Thanks

[@jimmapp8257]

Sir , thank you, You spoke about every issue I was already thinking about & gave me confidence that I am on the right track, re-building my credit & am knowledgeable about this subject

[@CatalystGineer]

I found out, what was the cause of points lost (-54) on the credit report. There is a collection item with *Dispute tag from 2012, which was updated again 8/02/15, I don't get it was already on the report. How is this possible, a +54 points over the years, only to lose it from an old (already on credit report) item reposted again (it's not two items, just an update)?

[@crystal5823]

Really great video. Simple and informative. Thank you!

[@erickvillafan3609]

Great vid

[@edyfinance2993]

great video. I work in finance so I understand in details about credit card. I made a detailed video about credit card too, check it out if interested and let me know if you have any comments. cheers

[@ebo7310]

I'm considering a balance transfer. I have 1 cc w/ a 8k balance on a card with 13% APR. Would a balance transfer be useful if I find a 0% transfer card and 0% purchases. Or should I keep my current card and pay $1,000 a month until it's paid off if I can make those payments.

[@Creditcardinsider]

A balance transfer can be a useful way to reduce interest while you're paying off debt, since you are paying less interest, so more of your payments can go toward actually paying off the debt. This page explains more in detail to help you figure out if a balance transfer makes sense in your situation: www.creditcardinsider.com/learn/balance-transfers/ - John G

[@luismessimer1]

Thank u! Just what I was looking for

[@Insuranceexamprep]

The best video I ever seen on my iPhone

[@sirajahmed7952]

Thanks foe this video and posting helpful content. Question: I have about 10-12 various credit cards. I don’t carry balances over and pay in full every month. I have a 780 score. I got offered a 12 month no APR or cash advance/balance transfer on 2 of my existing credit cards and thinking about using about 70k between the two cards out of the 90k total credit line. This is for a real estate deal If I plan on paying off this balance off before the promotional period ends, will this negatively affect my score since I’m using up a large chunk of the credit line? I still another 8 cards with another 100k of credit line thats freed up. Thanks

[@Creditcardinsider]

Yes, utilization would be affected which would impact credit scores, but it would only be a temporary. Read this page to learn more about utilization and how it impacts credit scores: www.creditcardinsider.com/blog/how-does-the-credit-card-utilization-percentage-impact-my-credit-score/ - John G

[@sirajahmed7952]

@@Creditcardinsider thanks for sending. read through it. It would a temporary high utlization until i paid the balance off 6 months later. So in those 6 months, credit could be negatively affected looks like because of high utlization

[@italkart192]

Very well explained. Thank you

[@luckyl9105]

so i transfer all the balances to the new 0% balance transfer account, let's say I pay off all the balance on the new account, is it good to close the old accounts? or not so i can have more overall credit limit? Another thing I didn't understand you said... Does opening that new 0% balance transfer account will not lower my credit utilization/overall utilization?

[@Creditcardinsider]

Closing accounts can definitely reduce your overall credit available. Also, once those accounts fall off your credit report they'll stop contributing to your average account age and total number of accounts. See this page to learn more about closing cards: www.creditcardinsider.com/learn/when-to-close-a-credit-card/ Opening a new account with a 0% probably will lower your overall utilization if you keep all your other accounts open, as long as you don't charge more. If your total balances are the same but now you have a new credit limit available that reduces your overall utilization percentage. - John G

[@niirahmed5294]

I try to transfer balance but I didn't , when I put my bank card number that wasn't except please, can I know how

[@al-b7891]

Great advice. Is there a card that will tranfer student loands?

[@Creditcardinsider]

I don't think student loans can be paid with balance transfers, but you could check with specific credit card issuers to ask. - John G

[@Jonathan-hv9mt]

Excellent Video

[@ontheroadwithjoy6266]

At what point is your credit score considered to be GOOD? I'm doing the snowball method of paying off debt, and in paying off 3 accounts, my score has gone up to 743, in a month. I have two more to tackle, and a balance transfer card would be helpful to get rest of debt paid off in 10mos. At what score should I try to apply for a bal. transfer card. My debt utilization ratio is at 45% right now, so not sure if I need to wait till that is under 30%. I don't want to do several applications, and thus lower score.

[@Creditcardinsider]

Generally a FICO 8 above around 700 is considered "good" credit. Remember, you have many different credit scores, not just one. Credit card approval decisions are based on more than just one of your credit scores. There are other factors that go into the decision, like information on your credit reports and your income. Read this to learn more about credit approval decisions: www.creditcardinsider.com/blog/credit-score-need-get-credit-card/ So, there's no exact answer to "At what score should I try to apply for a bal. transfer card?" If you apply and you're denied, you'll get a letter that tells you the reason or reasons why you were denied, and then you can work on those areas and try again. If you're talking about a FICO score then 743 is pretty good and I'd expect you're in a good range to get approved for a card with a balance transfer offer, but the only way to know for sure is to apply. You could also check for pre-qualified offers: www.creditcardinsider.com/blog/get-better-credit-card-deals-with-pre-qualified-offers/ - John G

[@ontheroadwithjoy6266]

Thank you.....timely and helpful advice.

[@davidrivera9728]

I disagree, Close those hi intrest credit cards. This will lower your evalving credit (money that you owe to creditors) & it will raise your credit score considerably. 😀

[@301banban]

David Rivera I made that mistake. It took 2 years to get bs k on track.

[@PswACC]

is it true that not using your credit card affects your credit score as well?

[@Creditcardinsider]

If there's an account you have open that you're not using there are a few ways it can positively affect your credit scores: 1) It's an account on your credit report. Credit scoring models generally like to see more accounts. 2) It's account that's aging, and credit scoring models like to see a higher average age for accounts. 3) If there's a $0 balance on the card, then the entire credit limit is helping the credit utilization factor of credit scoring models by keeping utilization lower, which is a major factor. See this page for more about utilization: www.creditcardinsider.com/blog/how-does-the-credit-card-utilization-percentage-impact-my-credit-score/ If you have any other questions, please ask! -John G

[@Arabsummer]