Effect of transferring balances on credit report

[akpete]

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Today in the mail I got a couple purchase checks from my capital one card. It says they have the same APR as my purchases - fixed 11.9%. It also said no transaction fees. It seems pretty legit without hidden costs (I could be wrong). So I was thinking of requesting a higher credit limit, and using a check on another credit card that I have which has an APR ~17%, and then closing that account.

So my question is: How would this effect my credit score? It's big changes right before applying for ALP loans that I will for sure need, so I don't want to jeopardize that in any way. According to TransUnion, my credit score is 734. Could the inquiry into a higher credit limit and closing an account hurt me?

 

[box29]

I wouldn't close the previous account after it is paid off. That may really hurt your FICO score. Keep the account, cut up the card, and don't use it. Additionally, I was advised not to approach the maximum limit on your revolving credit accounts even on balance transfers and to try to keep your balances lower than 50% of the max limits.

Just my $0.02.

Here's a link to Suze Orman's site:

http://www.suzeorman.com/igsbase/igstemplate.cfm?SRC=MD012&SRCN=index&GnavID=20&SnavID=20

 

[akpete]

Thanks for the input box29. I wouldn't close the account until it's completely paid, which is feasible with a transfer and perhaps one more hefty payment. I'm already over 50% to the max on all 3 credit cards that I have, so that really is a non-issue. I couldn't work for ~year in undergrad, so I paid for everything with credit cards, and then throwing MCAT, med school app process, etc. on top, and I'm slowly digging myself out.

 

[tlew12778]

Why transfer to an 11% card? Get a 0% intro APR offer. You can have 12 months of payments going solely toward principle. A transfer to an account that is already open will not hurt your score. If they increase your credit limit, it could actually raise your score (presuming you are no longer charging anything else on your cards) by lowering your debt to credit ratio.

One hard inquiry is not going to hurt your score. Several hard inquiries in a short time frame will. 734 is an awesome score. I wouldn't worry about it too much.

As the PP said, don't close out your other account. You want to try to keep or get your total balances to be under 50% of your total credit line.

 

[akpete]

well, last year I tried to get a 0% APR for 12 mo. credit card, and they approved me for the card, but denied me the 0% and gave me *gasp* 18%! So since then I haven't bothered to try again. Maybe I will. Also, I just saw on the same cards website an offer for balance transfers at fixed 5.99%, but it didn't say anything about a transaction fee, so I'd have to look into that.

I think one concern is that I've heard your credit score will lower if you have a lot of open/available credit. Is that true?


Thanks for the help!! 🙂

 

[tlew12778]

No the main thing with open credit is when you go for a mortgage. It can be seen as a risk by your lender bc you might suddenly decide you need custom made furniture for every room in your new house, IYKWIM. So they will just tel lyou to close some out if they think it's an issue. But until then you can keep them open.

 

[akpete]

well, my card wouldn't increase my credit limit, so I guess I don't have to worry about balance transferring. It was an automated system, and it said that I'd get a letter in ~10 days explaining why they wouldn't increase my limit.

 

[MadameLULU]

I think one concern is that I've heard your credit score will lower if you have a lot of open/available credit. Is that true?

I think it depends on your payment history. I have eight revolving accounts (I can't say NO when a clerk at my fav. stores asks me to open an account 😛), but my score is 844. I was really surprised at my score, but guess it's pretty high b/c I pay all my cards in full, and I don't max them out. Plus, I've never had a late payment

 

[Blade28]

Agreed, once you've paid off the credit card, unless you're really concerned about temptation, keep the account open...cut up the card if you want, but closing the account decreases your available credit.