Friday, April 21, 2006

How a 0% Balance Transfer Affected My Credit Score

I'm going to post my credit score because I think it's very beneficial since a lot of people have the question, "How will opening ________ 0% credit card affect my credit rating?" So I'll share my results with you. My credit score: 762 The problem is that I don't know what my score was before opening the 0% credit card, so I don't know what effect it really had. Regardless, the effect could not have been that drastic. In March of 06, I opened my Chase credit card and did a balance transfer. I've done 4 of these in the past, and so I was sort of concerned my credit score was being impacted, but not really...mainly because I didn't have any large expenses in the near future, like a house. Fast forward to today, I got my credit score, and was pleasantly surprised at the score. So apparently, whatever the effect opening credit cards may have, it doesn't always have a drastic effect on your score. But since I don't know the real process behind the credit score, effects may vary, so don't say I didn't warn you. It'd be interesting to hear if anyone else saw the same thing? If you need more info on a 0% Balance Transfer, check out my previous post on it...

6 comments:

TADollar said...

Be proud, you have a high score. Just in case, check out your scores from all 3 agencies, since they vary depending on what information is available to them about your credit.

freedumb said...

Thanks Tadollar...this credit report came from Experian...I am curious about the other 2...Was kind of interesting because the loan office I was talking said they take all 3 credit scores and use the middle one. I wonder what this middle score would be...

Eric said...

I have a Providian credit card with a nice FICO tracking feature that shows my score from TransUnion month to month. My score over the past year prior to my 0% balance transfer project ranged from 758 to 793.

I then applied for 5 new cards for various balances transfers or sign up bonuses. The balance transfers brought me up to about 35% of my credit limit across all accounts.

The month after I took these actions my score dropped 41 points to just below a 720. I understand a score of 720 to be the low end of what is considered a good score to have to get the most favorable interest rates on a loan.

So was it worth it? At this point I have to say probably not. First, I will see less than $1000 after taxes. Second, it's been a chore to get everything setup and organized and my time is valuable to me. An assumption I made based on other people's advice is that my credit score slip is temporary. It will go up in a few months because I took a hit just by applying for so much new credit. It will also go up after the transfers are paid off in a year. Will it get back to where it was before? This remains to be seen. So these are the downsides.

However, it is free money. I still find the idea of profiting off the credit card companies really delicious.

freedumb said...

Eric, Yeah, making money off of the credit card companies makes me an extremely happy credit card user. As long as it goes back up and you didn't have to apply for any loans during that period, it'd be worth it to me...thanks for sharing! And dang, 793!?! Nice.

balancetransfer.citicards.com said...

it's a good read. You make some very good points

Credit Repair said...

great post, it really helped me alot…gives me alot of information… thanks…. nice job…
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