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04-09-2017, 10:14 AM #1
How does doing a Zero Percent balance transfer affect credit score?
Can anyone tell me if or how this will affect my credit score?
04-10-2017, 09:48 PM #2
Does Doing a Zero Percent Balance Transfer Affect Credit Score?
When you apply for new credit there is a small drop in your fico score when there is a new hard inquiry. This is generally a few points.
However there can also be some major benefits once a new credit line is opened.
Lets say you only have 1 credit card with a $2000 Limit and you have a $1500 balance. This will actually reflect negatively on your credit score as you will be utilizing 75% of your available debt.
If you apply for an receive a new credit card with a $5000 limit and transfer that balance at 0% for either 6 months 12 months or longer, the credit reporting agencies now see that you are carring $1500 balance on a card with a $5000 limit and 0 balance on a card with a 2000 limit. You only have $1500 utilized out of $7500 or 20 Percent Utilization. Lowering your utilization should actually increase your credit score.