Balance Transfer and Credit Monitoring
What to do about bad credit
How does a balance transfer affect your credit score?
Learn about the pros and cons of transferring your balance
How is your credit score calculated?
A balance transfer can affect your credit score. There are five factors that impact your credit score, three of which are particularly relevant when it comes to balance transfers: payment history, level of debt, length of credit history, credit mix, and recent credit inquiries.
How can a balance transfer affect your credit score?
A credit card balance transfer can impact your credit score in terms of level of debt, length of credit history, and recent credit inquiries. This can lead to a temporary drop in your credit score.
How can a balance transfer help your credit score?
Although your credit score may be affected when you transfer your balance, this does not necessarily mean it’s a bad step. There are some ways it may help improve your credit score in the long run. Having additional accounts may lower your credit utilization ratio. You might pay down your balance faster, which means you’ll be using less of your credit limits, ultimately helping to improve your credit score.
Conclusion
While a balance transfer may affect your credit score, you can regain any points lost by making timely payments and reducing your balance through regular payments that are higher than the minimum and waiting before applying for new credit cards. Don’t rule out a balance transfer due to the potential impact on your credit score. Evaluate the cost of a balance transfer against not doing it to help you make the best decision.
Source: https://www.thebalancemoney.com/how-a-balance-transfer-could-affect-your-credit-score-960445
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