topic Re: how much does balance transfer affect the credit score in Credit Cards

how much does balance transfer affect the credit score

suiken — Tue, 06 Oct 2015 22:44:52 GMT

hi how much will balance transfer affect my credit score?

applied for a 0% rate card a year ago, 0% and credit limit is almost reached so thinking about applying for another 0% rate and balance trnasfer card (chase slate) and transfer the balance over. only this card's limit is almost reach and my credit utilization for all the cards is about 20% (maybe lower after I apply for slate) so how much will it affect the credit score? thanks for your help

also if I purchase something and it will go over the limit, I can call to see if I get approved or not right? is it a hard pull or soft pull? probably just a little bit over the limit. and the pull will happen even if I didn't get approved right?

Re: how much does balance transfer affect the credit score

Pway — Tue, 06 Oct 2015 22:59:46 GMT

@suiken wrote:
hi how much will balance transfer affect my credit score?

applied for a 0% rate card a year ago, 0% and credit limit is almost reached so thinking about applying for another 0% rate and balance trnasfer card (chase slate) and transfer the balance over. only this card's limit is almost reach and my credit utilization for all the cards is about 20% (maybe lower after I apply for slate) so how much will it affect the credit score? thanks for your help

also if I purchase something and it will go over the limit, I can call to see if I get approved or not right? is it a hard pull or soft pull? probably just a little bit over the limit. and the pull will happen even if I didn't get approved right?

By reading the statements you have provided above, the bt card is almost maxed out. What it seems like to me is that you are just shifting debt from card to card without making any dents in the balance. Because there is no way that this card that you bt a year ago should be no where near maxed out seeing you have been making substantial payments to get this card paid off. I really believe you need to analyze what is going on in your financial situation. I am not judging here but I am specifically giving my honest opinion on what has been provided. It also depends on whether you will get approved to cover the entire bt without maxing this card out as well. Please take into consideration of what is going on in your current profile.

Re: how much does balance transfer affect the credit score

suiken — Tue, 06 Oct 2015 23:05:59 GMT

oh I can pay it off if I want, just taking advantage of the 0% rate. (and 0% balance transfer rate if I apply for chase slate and go that route)

Re: how much does balance transfer affect the credit score

Pway — Tue, 06 Oct 2015 23:10:02 GMT

Okay I understand that, but will you be approved for that CL to cover the bt? What are your current scored by the way?

Re: how much does balance transfer affect the credit score

Anonymous — Tue, 06 Oct 2015 23:12:12 GMT

Taking advantage of a 0% rate is one thing but continuously opening 0% cards to shift debt is another. Thats assuming you get approved with a limit high enough to cover the transfer. If you can pay it off I suggest doing so.

But to answer your question a maxed out or nearly maxed out new card will lower your AAoA and almost certainly decrease your score. No one can tell you by how much. It varies.

Re: how much does balance transfer affect the credit score

UncleB — Thu, 08 Oct 2015 09:59:32 GMT

@Anonymous wrote:
Taking advantage of a 0% rate is one thing but continuously opening 0% cards to shift debt is another. Thats assuming you get approved with a limit high enough to cover the transfer. If you can pay it off I suggest doing so.

But to answer your question a maxed out or nearly maxed out new card will lower your AAoA and almost certainly decrease your score. No one can tell you by how much. It varies.

This has been my own experience recently with balance transfers. Everybody has a different profile, but in my own case my scores stayed around the same. The new credit line helped my utilization, but the AAoA 'hit' had a slight negative impact (I don't have dozens of old accounts to keep it from being impacted).

The net result in my case was a two point decrease. I expect it to recover in the coming months, but for folks who, to borrow a term, "pyramid debt" their score will continue to take negative 'hits' until some of the debt actually starts to be reduced, and not simply moved to another lender.

This being said, I'm certainly not going to pass judgement on someone who is working on paying down a balance and is simply looking to take advantage of 0% APR offers as a way to speed things up. Working on maximizing FICO is a hobby for some folks (and the actions that raise FICO scores generally are healthy anyway) but sometimes "life happens", and we have to do what makes sense financially, scores be damned.

Re: how much does balance transfer affect the credit score

suiken — Thu, 08 Oct 2015 10:27:04 GMT

yeah I thhink I can get the CL to cover the bt, but I think they take half of the CL for bt, so 75% of balance now. score is in 700s.

but sounds like it's better to pay it off, and don't bt to another card, guess I will pay it off

"But to answer your question a maxed out or nearly maxed out new card will lower your AAoA and almost certainly decrease your score. No one can tell you by how much. It varies. " it will lower the AAoA that's because of newly opened account right? it got nothing to do with maxed out new card? and decrease the score will be bt to new card I geuss? but if I open new account the utilizaion will be lowered.

also trying to get into credit card churning, but every year or so you open a new card that will lower your AAoA for sure right and lower the score.

Re: how much does balance transfer affect the credit score

UncleB — Thu, 08 Oct 2015 10:53:49 GMT

@suiken wrote:
yeah I thhink I can get the CL to cover the bt, but I think they take half of the CL for bt, so 75% of balance now. score is in 700s.

but sounds like it's better to pay it off, and don't bt to another card, guess I will pay it off

"But to answer your question a maxed out or nearly maxed out new card will lower your AAoA and almost certainly decrease your score. No one can tell you by how much. It varies. " it will lower the AAoA that's because of newly opened account right? it got nothing to do with maxed out new card? and decrease the score will be bt to new card I geuss? but if I open new account the utilizaion will be lowered.

also trying to get into credit card churning, but every year or so you open a new card that will lower your AAoA for sure right and lower the score.

That's right, each new account will lower your AAoA, but if you've got a thick file (many old accounts) the impact is typically minimal.

Opening a new account every year or so shouldn't cause too much of a negative impact on your score, assuming you don't have any other credit issues to be concerned with (like high utilization, or 'baddies'). And the thicker your file is, the additional accounts will have even less of an impact.

It's sometimes counterintuitive... just as (usually) you need credit to get credit, you must apply for new accounts to get them, but if you get too many of them it's viewed as negative by the scoring algorithms. It's kind of like 'Goldilocks' - you need some accounts, but you don't want to apply for too many.

The 'trick' is figuring out, for your own specific profile, exactly what the "not too hot, not too cold" number is.

Re: how much does balance transfer affect the credit score

takeshi74 — Thu, 08 Oct 2015 13:37:20 GMT

@suiken wrote:
hi how much will balance transfer affect my credit score?

It's not really a matter of BT or no BT. It's a matter of revolving utilization. While a BT won't change overall utilization it will impact individual utilization.

@suiken wrote:
applied for a 0% rate card a year ago, 0% and credit limit is almost reached so thinking about applying for another 0% rate and balance trnasfer card (chase slate) and transfer the balance over. only this card's limit is almost reach and my credit utilization for all the cards is about 20% (maybe lower after I apply for slate) so how much will it affect the credit score?

High utilization will hurt your score. Having a maxed card is an additional ding on top of that even if your overall utilization is 20%. Both overall and individual matter. If you have a maxed card or one with high utilization then don't count on a new card for a BT. Not only are your odds of approval impacted by the maxed card but the limit you stand to qualify for will be lower and the APR that you stand to qualify for will be higher.

@suiken wrote:
oh I can pay it off if I want, just taking advantage of the 0% rate. (and 0% balance transfer rate if I apply for chase slate and go that route)

Keep in mind that regardless of 0% offers (look at your reports and not that there is no indication whether or not a card has a 0% offer), prolonged high utilization can lead to adverse action. Short term high utilization generally isn't an issue but be careful keeping that card maxed and/or at high utilization.

Re: how much does balance transfer affect the credit score

suiken — Wed, 14 Oct 2015 17:42:14 GMT

so individual utilization what's good like 80% 90%? this card's 0% rate will end Feb next year, I am at around 85%. was thinking about max it out then when the 0% rate is over I will pay everything off. then repeat with another card.

any revolving utilization is bad? can I BT a small amount or pay off everything?

Re: how much does balance transfer affect the credit score

Anonymous — Wed, 14 Oct 2015 19:01:40 GMT

Do a debt shuffle... problem solved.

Re: how much does balance transfer affect the credit score

OmarGB9 — Wed, 14 Oct 2015 19:22:57 GMT

Individual utilization is pretty important too. Going over 50% on an individual card dings you pretty bad, and the higher it goes, the more points you lose. I know from experience.

Re: how much does balance transfer affect the credit score

suiken — Wed, 14 Oct 2015 19:41:23 GMT

really? I went over 50% for awhile now, maybe half year and credit score was lowered by 20 not much, recovered some but I am still putting more debt on the card. so maybe the -20 wasn't from this card or from diff factors.

Re: how much does balance transfer affect the credit score

UncleB — Wed, 14 Oct 2015 19:57:36 GMT

I think the impact of high utilization on individual accounts varies based on your profile.

I have a card that reports at 70% utilization each month, but I PIF each time (I actually had two cards in this situation, but I finally got a CLI on the second one). However, I have other cards with high (for me) credit lines that are mostly unused to keep my overall utilization low. On the occasions where my high-utilization cards do report as PIF, I notice no difference in my score.

As long as my overall utilization doesn't change, the algorithm doesn't seem to care who I owe the money to. I'm not going to say this applies to everybody, but in seems to be the case for me.

Re: how much does balance transfer affect the credit score

OmarGB9 — Wed, 14 Oct 2015 20:34:52 GMT

Well in my case a couple of my cards shot up to 60-70% individual UTIL due to some emergencies. That made for 3 cards total over 50% (the third one was carrying a 0% BT). My scores dropped significantly. Like 20-30 points across the board. However, as I pay down the other two that weren't previously at 50%, I've recovered most of those points. And I have a feeling I will see my scores maximized once I can get overal UTIL below 10% and individual on all cards under 30%.