Could transferring your credit card balance affect your credit score? The answer … it depends. Let us look at three factors that could possibly affect your credit rating. The age your accounts have been open, the type and number of recent inquiries, and the amount of current debt you have outstanding. There are many factors that can affect your credit score, but we will analyze the possible impact of these three to simplify your decision to make a balance transfer.
One of the factors used to calculate a credit score is the age your individual accounts have been active. The number of credit lines, and age the lines have been open are used to calculate your score. If you close out your credit card accounts after transferring the balance to a new lower interest rate card, then it would negatively impact your credit score. The advantage of keeping the old lines open, is that you will have older lines of credit for creditors to analyze. It's easier to predict how you will perform on a loan (credit line, etc) when their is a long payment history to reference ..
Another factor used to calculate your rating is recent credit inquiries. By applying for one or several credit cards your credit rating may be negatively impacted. So if you plan on financing a new car, home, appliance, etc. This would show up on your credit report as inquiries from credit card companies. It will look like you are scrambling for credit lines if there are any credit card companies inquiring about your past history.
The final factor is your outstanding debt. The amount of credit available to you and the amount of credit being used currently is analyzed to compute your score. So when you open a new line of credit, your amount of credit available would increase. And if you closed your old credit line, then this would decrease the amount available. The amount being used would not change much, since you are simply transferring the debt from one company to another.
There are many factors that impact your credit score. So seek the counsel of professional, like a Certified Public Accountant or other financing professional to determine if it is the right time to make a credit card balance transfer.