Will balance transfer help my credit score?
April10
I recently applied for a card and was approved that will give me 0% on balance transfers through 5/08. I have not used this card to make any purchases, and it has a $0 balance. The limit on the card is sufficient enough for me to transfer my other 3 card balances, have them paid off, and still not be maxed out on the card I am transferring to.
My question is: Will it look better on the credit score if I have 3 cards near maxed out that have been established and one new one with a high limit and $0 balance, or have 3 established cards with a $0 balance and one new card with a near maxed out balance?
That is my question going into the transfer, if it would help my score to have one card with a high balance and 3 with none…
What they look at is the total credit limit and the total card balances. You want that balance to be under 50% on as many cards as possible. Maybe just transfer partial balances. On the other hand, opening new credit cards is not good for your credit.
i personally had credit troubles a little over a year ago. i had a mid of 540 i know have a mid of 690 as of two months ago. i revolve very little i have three smaller credit cards i payoff every month. and i have an auto loan. thats it, Jus tdont keep your balances over about 50% of the available credit limit. and i think you should be fine.
It shouldn’t matter. Part of your credit score is based on balance to credit limit ratio.
So let’s say for example, you have your 3 cards almost maxed. Let’s just say they are maxed for this scenario. So each have a $500 limit. So you have $1500 total debt on a total credit limit of $1500. So you are then using 100 % of your credit limit.
BUT, you just got a new card (which that alone will slightly ding your credit score, but not by much – just a few points). But now that new card has a $1500 credit limit.
So now you have a total of $3000 credit limit, and are using $1500. So you are only using 50% of your total credit limit.
Even if you transfer all 3 to the new card, you will still be using 50%.
Now, here’s the difference. If your new card has 0% on balance transfers for a year, then you have 0% interest you’d be paying on that $1500 if you balance transferred from your other 3 cards. Yet if you leave those balances on those 3 cards, you are probably paying interest rates anywhere from 10-30% on each. So it would SAVE YOU MONEY to transfer all of them onto that new card so you wouldn’t be paying interest for a year. So you could just pay the principle.
I’d really recommend getting a book by Suze Orman called Young, Fabulous and Broke. It is geared to younger people (30’s and younger), but explains basic finance issues including interest rates, how to bring up credit scores, how credit scores are calculated, etc.
I would not transfer the entire balance at first. Transfer down to around the 30% mark of your limit on the other three cards.
Pay this off as soon as you can and then transfer the remaining balances. Be sure to leave the other cards open and use them for everyday purchases like gas and food, just be sure to pay them off each month in full before the due date to avoid interest charges.
you can lower or pay off the balance on your 3 cards , but remember if you maxing out the forth card , it will not improve you credit , the rule is that you need to be 50% or less of your limits , to improve credits scores , if you are more than 50% or even worse case maxed out on any revolving credit card , your credit scores will drop dramatically , hope it helps
If you have such cards, contact their issuing agencies and ask them about balance transfer fees and other charges and are they willing to transfer balances from your existing high interest rate credit card. If you don’t have any such low interest rate credit card, which offers balance transfer, by all means search for one that provides attractive balance transfer rates and a 0% Intro APR for the longest period. This will keep the interest rates on the lower side. Now, transfer your high interest rate balances to this credit card, and close the high interest credit card account. The money you will save on interest rates can be used for other things to improve your financial condition.
Remember, proactivity always pays, credit card companies don’t lower interest rates on their own. They have to be told to do so, and if you have valid reasons and good credit history to support you, you can always get a bargain, otherwise there is always the option of balance transfer. Get all information about balance transfer at: http://www.credit-card-gallery.com/article/260,3_step_proactive_approach_to_lower_the_high_interest_rates_on_your_credit_card