How will credit card balance transfers affect my credit rating and rating? Transferring balance from a higher interest credit card to a brand new lower interest
card can definitely help you save money on interest, if nothing else a minimum of until
the introductory rate ends (if applicable). All of us receive those infamous credit
card offers within the mail, urging us to apply for any new card and transfer our higher
interest balance over, in order to make use of the lower interest rate
that this new card provides. This seems like a logical move to make, right? I mean, lower interest prices on
your credit accounts equals more income in your pocket, true? Yes,
transferring your charge card balance from a high interest credit account to some
lower one is an excellent method to save money on interest, especially should you carry
a lot of debt in your credit card(s). But how does this affect your credit score and credit score? The answer to that particular question really depends on your
situation, and the way you go about it. A closer lookLets say you've $5, 000 in debt on credit cards account from "ABC
Credit Services", with a total credit line of $10, 000. With this
example, lets just say this happens to be your only open credit card
account. As your debt takes up half of your total line of credit, this would put
your percentage of debt when compared with your credit line, for this accounts, at 50%.
We'll call this your own "debt percentage". You're making payments to ABC without any problems and you seem happy using the
account and the interest rate. That's, until one day you check your own mail, and
there it is, credit cards offer from "XYZ Credit Services" having a
fixed interest rate set at 1 / 2 of what you're paying now with ABC! All of a sudden
dollar signs start popping up in your mind, and you start trying to determine
how much money you could conserve by transferring your $5, 000 stability to XYZ. You
then decide you are going to apply for the account at XYZ. Your own credit is good
right? No issue! You receive the card in a week, and go ahead with the
balance move. So how does this affect my credit rating? How this balance transfer affects your credit score and credit score really
depends on which you do from this point upon, and also what your credit collection is on
your new card through "XYZ". If your credit line in your new card is
lower than that from the original "ABC" credit account, then your own
"debt percentage" will be higher, which generally will decrease your
credit score. This would be true should you closed the original account at ABC, as well as
kept your new account as your only open charge card account. If you've had your "ABC" credit card for some time (maybe 2 years or
more), and you've got a good payment history with them, then it will in all probability
be in your best interest to maintain that account open, even if you do not use it.
Especially if your line of credit with your new lower interest greeting card is below
$10, 000. Usually with regard to your credit score, you don't wish to
increase your "debt percentage", you wish to decrease it. For example, if you retain both accounts open, you will possess a total credit
line of $20, 000. Together with your $5, 000 in debt on your card, and your original
account from ABC having no balance, your financial debt percentage would only be 25%,
which is a great percentage and your credit score may reflect that. Now reverse that and say that you simply closed your credit account from
"ABC", considering the fact that your credit line at "XYZ" stays exactly the same,
you would have a debt portion of 50%, which is what you began with in
the beginning. Add to that a newly acquired credit card with little if any
payment history on it, and you're credit rating would almost surely decrease, at
least before you establish a longer payment history in your new account. So for this instance, it would probably be best to maintain both accounts open.
Your lower debt percentage may offset the hit your score required from
obtaining your new credit greeting card. And looking to the future, it will
look better on your credit report by doing this too. Avoid increasing your debt percentageWhen attempting to keep your credit score up to possible, try to avoid doing
anything to improve your debt percentage. Even though the quantity of debt you
are carrying on your "revolving credit" may be the same, it will always
look better if you are using 25% of your total credit score, compared to using up 50%
of this. But don't try too hard to diminish it eitherBe sure not to go too far by applying for more credit than you'll need,
just because you think it will help your credit score through an even lower
debt percentage. Obtaining any new credit will generally reduce your credit
score slightly, at least for a brief period of time. Applying for credit an excessive amount of and too
often will almost also have a negative impact on your credit rating, which
is exactly what you do not want. Your time would be better allocated to trying to
pay down this financial debt instead. As with anything, being informed is the keyBalance transfers similar to this can and will save you cash on interest, if you do this
right. Stay informed about how such things as this affect your credit, and you ought to be just fine!






Jake Rustenhoven may be the webmaster of http: //www. freebiecreditreport. com and also the author of many other self-help and how-to articles associated with credit reports and credit scores.

View this post on my blog: http://creditcard.valuegov.com/how-credit-card-balance-transfers-can-affect-your-credit-score/
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