If we do balance transfers from our credit card, pay more than the minimum payment within the due date and payoff the entire amount slowly within the specified time-frame, does it improve our credit score?

Or, does a balance transfer have a negative effect on our credit score?

Any suggestions are highly appreciated.

3 Answers 3


The transfer may impact utilization, as discussed in How is your credit score related to credit utilization?

My accepted answer discusses that aspect of this question.

Of course, applying for that card (if new) will impact other aspects of the scoring such as credit inquiries and average account age.

One thing to keep in mind, if it's not obvious, the score is a snapshot, changing as any balances are reported, weekly or more often depending on how many accounts there are. Balances and their impact will change as they are paid. So doing anything to save interest is money in your pocket, and once paid off, your score returns to normal. Credit inquiries have a long (two year) effect, and things like missed payments and unpaid cards.

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    @jnl most welcome. And welcome to Money.SE a great team here to answer your PF questions. Oct 22, 2013 at 13:57

Transferring a balance onto a credit card will affect your "leverage ratio" (total credit balance over total credit limit) if the balance isn't coming from other cards. So, if the amount you owe isn't already on your credit report somewhere, or it's in a "non-revolving" credit account (like a balance owed to a utility, or on a structured note like a car payment or student loan), your leverage will increase and that could lower your score.

In addition, opening a credit card for the purpose of transferring a balance will reduce the average age of your credit accounts (ding), and if you close a credit card account from which you're transferring a balance, you will further reduce the average age and also the maximum age of your cards (ding and ding).

Working against those possible dings, regular, on-time payments to the card balance will slowly improve your credit history; derogatory marks already on your credit will get older (meaning they impact your score less) and eventually drop off. If the balance transfer approves your ability to make such timely, significant payments to your debt, it will be a net gain as long as you avoid the gotchas about how credit leverage and account age affect your score.

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    +1 - nice summary. We can use an FAQ type page addressing the credit score math. Oct 22, 2013 at 18:57

Certainly yes - as it will affect your utilization ratios (UR). Make sure to stay under 40% in all cards and you will be fine.

Note a balance transfer per se has no impact whatsoever - but the UR of one card will increase while the one of the other will decrease => the overall impact in the score will depend on how these two ratios change

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    The other answer I cited above shows 1-19% is ideal. If OP does change total owed, there may be no impact to utilization, UR is total owed divided by total available credit. I've run a card to 100% with no impact as the one card was $10,000, but total credit over $100K. Oct 22, 2013 at 0:02

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