topic Re: Balance Transfer Score Impact in Understanding FICO® Scoring

Balance Transfer Score Impact

Anonymous — Tue, 05 Feb 2019 17:38:31 GMT

Hi all - I'm interested in opening a balance transfer card to get some of my credit card debt in order. Here's what I currently have:

Capital One Platinum: $6000/$8200 (this is what I want to pay off)

Bank of America Alaska Air: $3600/$8000

Barclay Priceline Rewards: $2800/$6250

Wells Fargo Platnium: $0/$800

USBank Secured: $0/$300 (from when I was repairing my credit; it's the oldest account I have so I keep it open for the age and just make small charges occasionally)

Chase Rewards: $200/$10200 (wife's that I'm a joint user for)

I noticed recently that I prequalified for a Cap1 Quicksilver, which has a 0% balance transfer APR for 15 months. This would equate to $400 per month, which I could easily handle. However, I'm curious about the impact to my scores, which around 700-705 across the board. Some quick simulations on creditkarma and my various card site simulations put opening a new card at -10 or so (fine), while a balance transfer of $6k put ran a change of -40 to -50. I know these sites use FAKO scores with very rough estimates, but it seemed odd to me that a balance transfer would have the same impact as, say, taking out a huge personal loan or a 60-day delinquency.

So do balance transfers really give you a huge negative hit, or is this just FAKO weirdness and they're normally no different than the -10 or so one gets for opening a new card? If it's the latter I'd definitely like to move forward with this, but I'd be interested in some feedback first. Cheers!

Re: Balance Transfer Score Impact

thornback — Tue, 05 Feb 2019 17:38:44 GMT

It depends on utilization. So if you are approved for a 6k limit, and transfer 5k - you'll get hit pretty hard (15+ points depending on overall profile) for high / near max individual card utilization until you pay it down. However, if your approved limit is high enough that individual util on that card will remain at less than 28% of its credit limit after the transfer balance posts, you'll be fine.

Opening a new account may or may not ding your FICO scores- it depends on how a new card affects your AAoA (average age of accounts). Vantage (credit karma) and FICO respond to new accounts very differently - so using CK for even a rough estimate is not a good idea.

Re: Balance Transfer Score Impact

thornback — Tue, 05 Feb 2019 17:43:48 GMT

Also - check cap one balance transfer terms before you app - you mentioned you wanted to pay off your cap one platinum, but I don't think you can transfer a cap one balance to another cap one card - most issuers don't allow that (only only transfers from outside creditors). You may have to look into other issuers for a good BT offer.

Re: Balance Transfer Score Impact

Anonymous — Tue, 05 Feb 2019 17:57:07 GMT

Ah, that makes sense. Testing it on the myFICO simulation with a limit of $6000 put things at a -10 difference, which seems more sensible.

Given that most balance transfer cards allow you a certain number of transfers, would it make more sense to transfer balances to the new card in "portions" that would keep its util at a more reasonable level? E.g., my BT card has a limit of $6000, so I transfer $2k and pay it off, then repeat that process twice? I suppose that would also be affected by the decreasing util levels on the card I'm transferring from.

Will take a look at other options too if a second cap card isn't doable. I'm also prequalified for Discover it and Chrome, which have 18 and 14 month 0% APR as well.

Regarding Chase: Would I also not qualify for that given that I'm a joint user on my wife's account? Or does it only matter for the primary user?

Re: Balance Transfer Score Impact

kilroy8 — Tue, 05 Feb 2019 17:56:07 GMT

I don't know, you situation is interesting. You have good scores, but high util. Your CL's are decently high, so it is a real question about what a new card would give you for a SL. Citi is good for BT's, but SL's run low.

It's a dice roll in your case and the way I look at it, hard to predict.

Re: Balance Transfer Score Impact

thornback — Tue, 05 Feb 2019 17:58:43 GMT

Depends on how long the BT offer is available - if it's a 0% offer for 12 months, and you can pay it off in 6 months, then you'll have another 6 months to do a second transfer at that 0% rate. Some card issuers offer low or 0% BTs to card holders regularly - like Citi and discover, so even if you take the entire 12 months to pay one transfer, odds are high that you could easily take advantage of another BT offer for a second transfer.

Most issuers allow 3 or 4 simultaneous transfers - so if you get approved for a high enough limit, you could transfer more than one balance st once - so long as you are confident in your ability to repay before the end of the offer period so you don't get hit with insane interest.

Re: Balance Transfer Score Impact

thornback — Tue, 05 Feb 2019 18:06:46 GMT

Yea i dont know how being a joint / authorized user affects internal BTing -- you would have to call chase to confirm, but I'm inclined to believe it's forbidden.

Discover is great for BTs and they are a flexible issuer. I've even read where they have approved temporary credit limit increases to cover BT balances, when requested - so that may be a solution to a lower limit upon approval. If you have a solid preappoval from them, it may be your best option.

Re: Balance Transfer Score Impact

FlaDude — Tue, 05 Feb 2019 18:18:24 GMT

@thornback wrote:
Depends on how long the BT offer is available - if it's a 0% offer for 12 months, and you can pay it off in 6 months, then you'll have another 6 months to do a second transfer at that 0% rate.

Some transfer offers are time limited. I just got an Amex ED card at 0% for 15 months, but transfers have to be initiated in the first 60 days for the promo rate.

Keep in mind too that if you are paying transfer fees, your effective APR will be lower if you use that money for 12 months rather than 6.

@thornback wrote:
Some card issuers offer low or 0% BTs to card holders regularly - like Citi and discover, so even if you take the entire 12 months to pay one transfer, odds are high that you could easily take advantage of another BT offer for a second transfer.

Most issuers allow 3 or 4 simultaneous transfers - so if you get approved for a high enough limit, you could transfer more than one balance st once - so long as you are confident in your ability to repay before the end of the offer period so you don't get hit with insane interest.

Chase and BOA are two more that make regular BT offers to me. With the mountain of debt I have, I have no expectation of paying off the balances before the promo period ends (espescially since I'm putting any extra money towards balances that have interest) . I'll have at least one more round of BTs next year before I can fully retire the debt.

Re: Balance Transfer Score Impact

thornback — Tue, 05 Feb 2019 18:20:17 GMT

Edit to previous post:

Read BT terms fully. Some terms require all transfers be initiated within a certain time frame (like within 90 days of account opening) to take advantage of the offer. So you may have to do your transfers simultaneously as opposed to doing one transfer, paying it off, then a second transfer unless the issuer offers a new BT deal for the second transfer.

Re: Balance Transfer Score Impact

FlaDude — Tue, 05 Feb 2019 18:22:18 GMT

@thornback wrote:
It depends on utilization. So if you are approved for a 6k limit, and transfer 5k - you'll get hit pretty hard (15+ points depending on overall profile) for high / near max individual card utilization until you pay it down. However, if your approved limit is high enough that individual util on that card will remain at less than 28% of its credit limit after the transfer balance posts, you'll be fine.

That's very much my experience. Any new card will improve your overall UTI, and as long as you transfer the 6k balance to a card (or cards) with a limit higher than 8200, I would expect your score to improve.

Re: Balance Transfer Score Impact

thornback — Tue, 05 Feb 2019 18:22:30 GMT

@FlaDude wrote:
@thornback wrote:
Depends on how long the BT offer is available - if it's a 0% offer for 12 months, and you can pay it off in 6 months, then you'll have another 6 months to do a second transfer at that 0% rate.
Some transfer offers are time limited. I just got an Amex ED card at 0% for 15 months, but transfers have to be initiated in the first 60 days for the promo rate.

Yesss... thank you for pointing that out... I just thought of that and was typing an edit at the same time you posted this.

Re: Balance Transfer Score Impact

Anonymous — Tue, 05 Feb 2019 18:34:34 GMT

Consistently amazed at the speed and thoroughness of the responses here. You folks are awesome.

Given the above, I'll do some more research into Discover (if they are indeed flexible for BT CLI increases). Will report back with my results if I end up going through with things. Thanks!

Re: Balance Transfer Score Impact

Rogue46 — Wed, 06 Feb 2019 01:36:38 GMT

To the best of my knowledge I don't think capone will let you do a balance transfer between their cards so you might want to double check that.