How Do Balance Transfers Affect Credit Rating?

Keep the Old Accounts Open

Credit ratings can increase by transferring credit balances from old cards to new ones, just as long as you remember to keep the old accounts open. That way you can increase the amount of credit that is due you, and lower your percentage at the same time. When you lower your debt percentage you also raise your credit score, but watch out: If you cancel your old card when you get your new one, this will decrease your credit balance; as a result your credit score will plummet.

Combining Your Balances

This is due to the fact that your debt is still the same but is not counterbalanced by a higher balance. By keeping both credit cards open, even if not using the old one any longer, you are combining the two balances and thereby increasing your credit balance. It is crucial to not go overboard with the credit cards once you have your credit rating increased. Too many cards tends to increase your debt while lowering your credit rating.

Pay Up Current Debts

It is much better financially to have 25 percent debt or less on your card than it is to have a debt rating higher than that. You should do your best to pay up your current credit debt rather than repeatedly acquiring new credit cards, as this is a sure-fire way to decrease your credit rating. It is much better just to have a few credit cards and keep your debts paid on a regular basis than it is to have multiple cards.

The Best Interest Rates

Using less than 30 percent of all potential credit while keeping all credit cards open is ideal. Always pick the cards that provide the best interest rates, and stop charging on any of your cards until your balance is below that crucial 25 to 30 percent level as this will cause your credit score to rise. There are two basic things you need to remember while calculating your credit rating: how you pay off your debts and how much debt you acquire.