Do Balance Transfers Affect Credit Scores?

A credit card balance transfer is a potential solution for people who are struggling with a great deal of outstanding debt. For those who are unfamiliar, it means moving a balance from one account to another account, which might not sound very impressive but can nonetheless be very effective. After all, different accounts have different interest rates and different loan terms, particularly when they exist for the purpose of encouraging people to carry out a balance transfer.

Such transactions are major decisions. As a result, people need to ask questions such as, “Do balance transfers affect credit scores?” in order to form a complete understanding of what to expect. 

How Does a Balance Transfer Affect Credit Scores?

Looking at the factors that affect credit scores, people should be able to guess some of the ways a balance transfer can change their credit score for either the better or the worse.

Payment History: Balance transfers can make it easier for people to make their payments. This is because they often come with either reduced interest or even no interest for a time. Thanks to this, if people make either their regular payments or even increased payments, they can pay down the principal faster than otherwise possible.

 Something that will make their outstanding debt more manageable by reducing the interest charged in each subsequent period. Be warned that this is very much reliant on people making good use of this opportunity. There are a lot of horror stories about people who fail to do so, with the result that they wind up more indebted than ever once the initial grace period comes to an end.

Amount of Outstanding Debt: Opening a new account should automatically improve a person’s credit score to some extent. This is because the effect of their outstanding debt is always relative to the maximum amount that they can take out. 

Since a new account means an increased maximum, this means a better credit score. If people can make their payments on time, they should be able to further improve their credit score through this factor.

Length of Credit History: On its own, a balance transfer won’t do anything to a person’s length of credit history. However, a lot of people choose to close accounts after debt consolidation. This can be problematic because that will cost them the credit history associated with those accounts. 

For the best results, people should keep those accounts open after the balance transfer. However, they need to make sure that they don’t run up more debt by making use of the credit that is now available. You can find more information on this at

Mix of Accounts: Having a mix of accounts is beneficial for a person’s credit score because it shows that they know how to use different kinds of credit. A balance transfer shouldn’t have much effect on this factor. However, there are a couple of potential exceptions. 

For example, a person might not have had a credit card before, in which case, this can be beneficial. In contrast, a person might choose to close their cleared accounts, in which case, this can be detrimental.

Credit Inquiries: Credit inquiries can be either soft or hard. Creditors can carry out soft credit inquiries without needing the consumer’s consent. As a result, they don’t affect said individual’s credit score.

 In contrast, the creditor carries out hard credit inquiries when the consumer applies for an account, with the result that they do affect a credit score. If someone applies for a new account for the purpose of carrying out a balance transfer, that will have a small effect on their credit score for the worse.

Further Considerations

Summed up, there isn’t a simple answer to the question, “Do balance transfers affect credit scores?” Instead, everything depends on two things. One would be a person’s ability to choose the right account for their balance transfer. The other would be a person’s ability to make use of the opportunity presented by their balance transfer. Either way, it’s always a good idea to keep an eye on your credit reports to make sure all the information they contain is valid. You can get your credit reports free of charge at

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