Does Transfering Balances Hurt My Credit
Does transfering balances hurt my credit? The situation I have is this. I have some "checks" I have received in the mail from my credit card companies. They boast a 1.99% fixed APR. Assuming this is transfer has a better payoff with fees and all, will this type of transfer hurt my credit score? How does this affect my credit score?
[addsig]
To maximize your credit score you want to keep your balance on any credit card to 30% or less of the credit limit. So as long as your balance levels remain below that you won't hurt your score.
If you transfer balances from cards with high interest rates, be sure to close the old ones. I don't see how that can hurt. I think old/established accounts are better than new ones, but lower payments should improve your credit profile.
I wouldn't get rid of the old credit cards (the ones from which you transferred balances), especially if you've had them a long time. If you're concerned about running them up again, put the cards in a block of ice in the freezer, or even cut them up, but open lines (especially ones you've had for a long time) usually help more than they hurt, especially if the balance is small or zero.
DO NOT CLOSE THE OLD ACCOUNTS!!One of the main determiners for credit scores is length of credit history and amount owed to amount available. If you close these accounts you will be affecting both of these areas and lowering your score. Keep the card open but without a balance.!!
The question still remains. If I transfer a balance to another card, will this hurt my credit score?
Yes do not close old accounts. Your scores will go down if your total amount of credit available goes down, so you would need to replace it anyway to keep your scores the same. Once you open account the damage is done, it is best to open as few accounts as you need.
I have 2 credit cards. Both accounts are open. Both accounts will remain open. Assume credit card 'A' has a zero balance. Credit card 'B' has a $2000.00 balance at 8%. If I transfer the balance from creidt card 'B' to credit card 'A' will this hurt my credit score. Yes I will be leaving both accounts open.
[addsig]
Transfering balances will not hurt your credit unless it creates one of your cards to have more than a 30% balance to credit limit on it.
For example:
Old Card has balance of $2000, limit of $10,000
New Card has transfers balance of $2000, limit of only $5000
Result: Lower credit because you now have 40% balance to limit
Or if you combine multiple cards to have that new card over 30%. On the same token, if you have high balances, you can transfer part of your balance so now both cards have under 30% this will HELP your credit score.
This is a tricky topic but the 30% rule is one that i've heard from many sources.
Thank you. I was hoping it wouldn't hurt my credit!
[addsig]
DO NOT CLOSE TRADE LINES EVER. THE OLDER THE BETTER
Sorry guys. I spoke too soon from my own experience. I always close the old ones and do not have more than 3 CC's open and almost never pay interest. I thought I was smart , but I guess not
I've looked at the rules of credit scores on this site and found that closing accounts doesn't do you any good. However the lower I can get my debt ratio the better. By March 2004 I will be debt free. Hopefully soon after this will be reflected in my credit score.
[addsig]
I'm not going to get into a debate on the pros and cons of closing a CC account.
Here's some things to consider, however.
Closing an account doesn't remove it from your credit report, so IF it was a positve accoutnt (good credit rating), it will still be there.
Closing too many accounts at one time WILL flag your file and possibly lower your score.
When applying for loans (particularly mortgages) the lender will always count the MAXIMUM limit on ALL active revolving accounts (credit cards, department store cards, equity lines, etc.) against your debt to income. So if you have 5 open CC's with $5K each available limit, you've got $25K debt against you.
I agree with myfrogger, split your balances in 2 or 3 accounts to keep the balances below their limits. When applying for a mortgage loan, it is always wise to have 3 open lines of credit with lower balances, than to have one or two credit cards with higher balances. Try to keep the old credit cards as opposed to opening new ones because of credit history. If you're transferring because of lower interest rates--try calling your current credit card company to match or beat the offer---you'll be surprised!
Another thing to keep in mind is they offer great interest rates at the beginning but shoot up after the intro. Also any charges besides the balance transfer are usally quite a bit higher and will be paid off 1st thus chewwing up your intro.
ED
I had a similar question to this, and since everyone is on the topic...
I have decent credit and was planning on opening up a bunch of lines for cash access..i.e. about a $100,000 home equity line, plus about another $75,000 in low intro interest credit cards. If I max these out on deals and have the need to secure a conventional investor mortgage or even hard money would I be SOL? I have heard mixed feedback on whether or not to open a bunch of variable credit or not. If I have access to a bunch of credit should I not take advantage of that?
I just had this discussion with my mtg broker. He told me that I should keep the balances of the accts away from the credit limit to keep my score high and he also said since I have so many cards (6) with high available balances to request that the "credit limits" be reduced. That way I have old accts and low "debt" (since they can't count those amounts against me any longer). The mtg companies treat an open line as fully extended when considering your debt/income ratios. I will be consumer debt free soon but relish my mtg debt. The leverage of property is a powerful tool!
If you do close credit card accounts, do so right before you close on the mortgage, then (within 30 days) call the credit card company and reopen. They all know about this game, and allow you to reopen ... some up to 90 days, but most 30 days.
So how often do they refresh your credit score?
[addsig]
I agree on calling your CC company. A few times I called to close the account and got decent deals, like 0% for 1 year.
Keep the debt under 50% of the max availible of the trade line. Again never close the account the older the trade the better the score. This is one of the primary factors in a score. Also use your cards make the monthly this is part of the game also. The credit b's have it figured if you use your card that improves scores