How does scoring algorithm know if you maxed out a card because you did a 0% balance transfer ?

[Jnbmom]

If you use your whole credit line then it's maxed out, has nothing to do with BT rate .

[Remedios]

It doesn't.

The reason why card is maxed out isn't relevant from scoring perspective nor there is a field for *balance purpose*, it's the fact that card is maxed that matters. 

In a nutshell, maxed card is maxed card.

[JuliusLothar]

I say it doesn't and therefore it's not showing creditors you're financially savvy.

[JuliusLothar]

Oh I see so your score can be penalized for something but not rewarded for another thing ?

[Jnbmom]

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@JuliusLothar wrote:

Oh I see so your score can be penalized for something but not rewarded for another thing ?

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Yes your score will be penalized for maxing out a credit card. Your others creditors don't know you are using a BT and frankly don't care. They see maxed out cards which isn't a good look.

By all means if you can save money with BTs then it's a smart financial move and once it's paid down your scores will reflect that.

[JuliusLothar]

Yes and an algorithm in a machine cannot feel empathy. Not to make excuses for insolvent but to give credit where credit is due. Pay no attention to that computer behind the curtain.

[calyx]

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@Jnbmom wrote:

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@JuliusLothar wrote:

Oh I see so your score can be penalized for something but not rewarded for another thing ?

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Yes your score will be penalized for maxing out a credit card. Your others creditors don't know you are using a BT and frankly don't care. They see maxed out cards which isn't a good look.

By all means if you can save money with BTs then it's a smart financial move and once it's paid down your scores will reflect that.

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^ Which is a good reminder that utilization is just a point in time.   As long as you're reducing the balance over time, your score will recover.
This is also something that trended data might catch, whereas point-in-time scoring does not.

[tooleman694]

Banks like to see you paying off your cards, not maxing them out.

[RSX]

this is why i have only ever used 70% of the total CL for a BT (i actually try for 30% which is ideal, but i did the 70% once)

and make sure the monthly payments are enough to bring down the % month over month