topic Re: Balance Transfer Dropped my Score!! in Understanding FICO® Scoring

Balance Transfer Dropped my Score!!

Anonymous — Fri, 27 Apr 2018 15:13:48 GMT

I recently did a balance transfer to my new Wells Fargo Cash Wise Visa of 6K of 7,500 limit from 3 other cards since there was a good enough deal to do so but yesterday my TU score dropped 27pts as a result of it. Is this normal for balance transfers even if it's the same overall debt? I am still under 20% overall utilization. Should I have done a different percentage?

Re: Balance Transfer Dropped my Score!!

imaximous — Fri, 27 Apr 2018 15:17:56 GMT

@Anonymous wrote:
I recently did a balance transfer to my new Wells Fargo Cash Wise Visa of 6K of 7,500 limit from 3 other cards since there was a good enough deal to do so but yesterday my TU score dropped 27pts as a result of it. Is this normal for balance transfers even if it's the same overall debt? I am still under 20% overall utilization. Should I have done a different percentage?

That's because you just killed the utilization on that card. Plus the inquiry for getting it, plus the new account lowering your aaoa.

Re: Balance Transfer Dropped my Score!!

K-in-Boston — Fri, 27 Apr 2018 15:20:54 GMT

Usually the best option is do whatever helps the most financially. You are using 80% of your credit line on that card, so it's expected that you'll take a hit for high utilization on one card. How much that stings will differ depending on your credit file. Once you get that down under around 60% you should see a little gain back and it should be back to noprmal at around 29%. Completely normal.

Are the previous balances gone from your credit reports now? I do a lot of balance transfer shuffling, so depending on the time that I look at my reports I may have the same $15k or $20k showing on multiple cards even though once has been paid off. Also, are you looking at the true FICO 08 scores? Vantage 3.0 and the "educational scores" can completely freak out with minor changes to utilization while FICO isn't as affacted.

Edit: Oh yeah, I totally missed the "new" part of that. That's likely a big part of the drop.

Re: Balance Transfer Dropped my Score!!

Peteyglad — Fri, 27 Apr 2018 15:21:37 GMT

There are many factors here.

1. It is a new Wells card so there was a hard inquiry which will drop your score.

2. It is a new card so your overall age of accounts is now lower.

3. Your utilization on that card is now 80% which is high.

4. Depending on how new your card is and your card reporting dates it is possible you are showing a balance of 6500 on your new Wells card, but you might also be still showing 6500 spread out on your other cards if they haven't reported the reduced balance yet.

Re: Balance Transfer Dropped my Score!!

Anonymous — Fri, 27 Apr 2018 15:43:06 GMT

1. I got the hard inquiry got last month for the new card already.
2. I assumed the new card hit I got included the aaoa hit as well.
3. I figured utilization would be high which is why I didn't completely max it out.
4. 2 accounts are not showing the reduced balances.

Re: Balance Transfer Dropped my Score!!

Anonymous — Fri, 27 Apr 2018 15:50:29 GMT

@Anonymous wrote:
1. I got the hard inquiry got last month for the new card already.
2. I assumed the new card hit I got included the aaoa hit as well.
3. I figured utilization would be high which is why I didn't completely max it out.
4. 2 accounts are not showing the reduced balances.

3. You could try to talk to an analyst and see if they can raise the CL so your card UTL is not showing 80%, you might get it.

4. Those two accounts will show $0 on next statement close. BUT, depending on what day you paid those off, you might still a small balance on those cards.

Re: Balance Transfer Dropped my Score!!

Anonymous — Fri, 27 Apr 2018 16:12:08 GMT

@Anonymous wrote:
@Anonymous wrote:
1. I got the hard inquiry got last month for the new card already.
2. I assumed the new card hit I got included the aaoa hit as well.
3. I figured utilization would be high which is why I didn't completely max it out.
4. 2 accounts are not showing the reduced balances.
3. You could try to talk to an analyst and see if they can raise the CL so your card UTL is not showing 80%, you might get it.
4. Those two accounts will show $0 on next statement close. BUT, depending on what day you paid those off, you might still a small balance on those cards.

I'll check into a CLI on that card. Thanks for the input.

Re: Balance Transfer Dropped my Score!!

Anonymous — Fri, 27 Apr 2018 16:13:09 GMT

As a general rule any time I open a new account I expect a drop in scoring. Be it from the inguiry, the new account, the change in AAoA....whatever reason(s) I just expect it and try not to freak out too much. Things usually settle out and recover soon enough.

Re: Balance Transfer Dropped my Score!!

Anonymous — Fri, 27 Apr 2018 17:08:38 GMT

I initially wanted the transfer to eliminate balances on multiple cards. I was denied a new card last year for that very reason. I wanted to take that card off the table.

Re: Balance Transfer Dropped my Score!!

Anonymous — Sat, 19 May 2018 21:34:25 GMT

@K-in-Boston wrote:
Usually the best option is do whatever helps the most financially. You are using 80% of your credit line on that card, so it's expected that you'll take a hit for high utilization on one card. How much that stings will differ depending on your credit file. Once you get that down under around 60% you should see a little gain back and it should be back to noprmal at around 29%. Completely normal.

Are the previous balances gone from your credit reports now? I do a lot of balance transfer shuffling, so depending on the time that I look at my reports I may have the same $15k or $20k showing on multiple cards even though once has been paid off. Also, are you looking at the true FICO 08 scores? Vantage 3.0 and the "educational scores" can completely freak out with minor changes to utilization while FICO isn't as affacted.

Edit: Oh yeah, I totally missed the "new" part of that. That's likely a big part of the drop.

Would it be best to split a balance rather than transferring full amount on one card.? I wanted to eliminate multiple balances by transferring to one card. Should I transfer some of this amount to another card so I'm under 30% all around?

Re: Balance Transfer Dropped my Score!!

NRB525 — Mon, 21 May 2018 04:05:51 GMT

@Anonymous wrote:
@K-in-Boston wrote:
Usually the best option is do whatever helps the most financially. You are using 80% of your credit line on that card, so it's expected that you'll take a hit for high utilization on one card. How much that stings will differ depending on your credit file. Once you get that down under around 60% you should see a little gain back and it should be back to noprmal at around 29%. Completely normal.

Are the previous balances gone from your credit reports now? I do a lot of balance transfer shuffling, so depending on the time that I look at my reports I may have the same $15k or $20k showing on multiple cards even though once has been paid off. Also, are you looking at the true FICO 08 scores? Vantage 3.0 and the "educational scores" can completely freak out with minor changes to utilization while FICO isn't as affacted.

Edit: Oh yeah, I totally missed the "new" part of that. That's likely a big part of the drop.
Would it be best to split a balance rather than transferring full amount on one card.? I wanted to eliminate multiple balances by transferring to one card. Should I transfer some of this amount to another card so I'm under 30% all around?

If your best rate / lowest BT Fee is on the one card, then you are saving money vs all other options.

The FICO score is not relevant to anyone but you, until you apply for new credit.

Saving money on interest cost, or BT costs, vs paying higher interest rates on the same balance, puts money in your pocket, makes it easier to pay down those balances.

So don't worry about the FICO score if you are paying down the balances, with the intent to get closer to zero outstanding debt.

Do worry if you are growing debt

Re: Balance Transfer Dropped my Score!!

Anonymous — Mon, 21 May 2018 07:27:29 GMT

This helps. Thanks😀