During 2009, credit card companies reacted to the turmoil in financial markets by slashing consumer credit lines by unprecedented amounts.  Many consumers saw credit limits reduce to a mere $100 above their outstanding balances.  This caused credit utilization ratios, a key factor in credit scoring, to shoot through the roof, dragging down credit scores to the floor. Continue Reading »

Although it seems the pace of credit limit cuts has slowed recently, they are still an issue many of us have to deal with.  The same goes for the relationship between balance transfers and credit limits.

Two helpful articles on this subject on our site include, “What to Do When Your Credit Limit is Cut,” and “How Balance Transfers Affect Credit Scores.”  If you are interested in learning more about protecting your credit score after a limit decrease or before a balance transfer, you may find these quite useful. Continue Reading »

Overview

A common concern for people considering balance transfers is how a balance transfer will affect their credit score.  I wrote a detailed article on balance transfers and credit scores recently, but ultimately, there is no concrete answer to this question.  Nevertheless, there are a few general rules a person can follow to limit any negative effects a balance transfer could have on your credit score and even improve your credit score.  First, however, we’ll start with the negatives. Continue Reading »

In response to numerous inquiries from visitors, we recently added an article on How Balance Transfers Affect Credit Scores to the main section of our website.

In this article, I examine a few scenarios in which doing a balance transfer actually improves a person’s credit score as well as a few major pitfalls to avoid.

Ultimately, whether you are applying for a credit card to earn rewards, get a 0% intro rate or do a balance transfer, there will probably be a change in your credit score.  Unfortunately, however, it is difficult to truly present a complete answer to questions like, “Will applying for a credit card hurt my credit score?”  For some people, applying for a credit card and consolidating balances can actually improve credit scores.  However, this is not the case for everyone.

Because predicting the effect applying for a credit card can have on any person’s credit score, we recommend using a free credit monitoring service that offers a credit score analyzer.  With this tool, you can test various scenarios to determine roughly how your credit score will be effected.

Again, these tools are not perfect, but neither is the confusing credit score system.

For more detailed information on how balance transfers effect credit scores, please see the complete article.

For additional information on websites that offer access to free credit scores and credit score analysis tools, please see the free credit reports section of this website.