Lenders look at your credit score when determining whether to offer you a loan and how much interest to charge you. If you plan to apply for a loan in the near future, you need to know how transferring credit card debt could affect your prospects.
Significance
Your debt levels account for 30 percent of your credit score, according to the Fair Isaac Corporation. To benefit your credit score, you should keep your debt levels below 30 percent of your available credit on each card, according to Bankrate.com.
Benefits
If you transfer debt evenly across several cards, you could improve you credit score, according to Bankrate.com. For example, if you spread your debt out so each card only had 20 percent of its credit line being used, your credit score would improve.
Warning
If you transfer all of your debt to one card, that card will have a much higher debt-to-available-credit ratio, which will hurt your credit score. Worse, if you close cards you have transferred the balances from, you will have a higher overall debt-to-credit ratio.
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