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Balance transfers affect on FICO scores?

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Anonymous
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Balance transfers affect on FICO scores?

I am preparing to refinance our home and want to transfer funds from one cc to another to avoid an accrued interest rate charge, and, subsequently, reduce the interest rate for 8 months with the new offer.  Would this affect my Fico score, or would I be better off to pay the $214 accrual?
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Anonymous
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Re: Balance transfers affect on FICO scores?



B4mylife wrote:
I am preparing to refinance our home and want to transfer funds from one cc to another to avoid an accrued interest rate charge, and, subsequently, reduce the interest rate for 8 months with the new offer.  Would this affect my Fico score, or would I be better off to pay the $214 accrual?


What is the current total balance on the card with the balance you want to transfer, and what is that card's CL?
 
What is the CL on the new card?  It is a brand new card, right?  If you haven't applied for it yet, you might not know the CL, but what sort of CL are you expecting?  If it's not a brand new card, what is that card's current balance and CL?
 
How much are you planning to BT?
 


Message Edited by cheddar on 03-14-2008 01:17 PM
Message 2 of 7
Anonymous
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Re: Balance transfers affect on FICO scores?

The current balance is $2,461 with a CL of $5,450.  The transfer would be to an existing card with a CL of $7,000 and the interest would be at 1.9% for 9 months. It currently has a balance of $470 at 21%. I would pay $250 a month, and transfer the balance again close to expiration. 
 
I am just concerned about a hit on my FICO score before refinancing.
Message 3 of 7
Anonymous
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Re: Balance transfers affect on FICO scores?

Since you are BTing to an existing card, your overall util won't change, so the only effect on your score might come from the individual util.
 
Currently
Card #1: $2461 / $5450 = 45%
Card #2: $470 / $7000 = 7%
 
After BT
Card #1: $0 / $5450 = 0%
Card#2: $2931 / $7000 = 42%
 
Your individual util doesn't change much from this BT.  I don't see much of an affect on your scores at all.  The only thing I would caution you about is doing a BT to a card that currently has a balance @ 21%.  Your $250 monthly payments will be applied to the balance with the lowest APR first (meaning the BT balance), and your 21% balance will sit there and sit there, accruing finance charges at a very high rate.  In the meantime, you'll never be able to touch that balance as long as you have some of the BT balance left.  From your previous post, it seems like it's going to take you a while to pay off the BT balance.  You don't want even a small balance accruing interest at the rate of 21% for months on end.
 
Can you pay off the $470 @ 21% before you do the BT?  If you can do that, then it seems like an OK plan to me.
 
Also keep in mind that depending on when your CCs report, it's possible that the balance you BT'd might be double reported for a while (if the card you're BT'ing to reports sooner than the card you're BT'ing from), which might drop your scores temporarily, since FICO will think you're carrying that balance on two different cards.
 
Message 4 of 7
Anonymous
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Re: Balance transfers affect on FICO scores?

I forgot about the possibility of both cards carrying a balance that is basically the same debt.  That could have a negative impact.  I'll just leave it as is and pay the lower balance off.
 
Thanks Cheddar
Message 5 of 7
Anonymous
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Re: Balance transfers affect on FICO scores?

If you max out the to card to 90 % or above it could really hurt.
Message 6 of 7
Anonymous
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Re: Balance transfers affect on FICO scores?



B4mylife wrote:
I forgot about the possibility of both cards carrying a balance that is basically the same debt.  That could have a negative impact.  I'll just leave it as is and pay the lower balance off.
 
Thanks Cheddar


Well, I don't think that's a deal-breaker, since it would just be temporary if it happens at all.  It all depends on the reporting schedule for the two cards in question. If it will save you money, it's probably a good idea.  Just be sure to pay that 21% balance off completely before you do it, though, if you can.
 


Message Edited by cheddar on 03-14-2008 11:07 PM
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