 TITLE: What Happens After a Balance Transfer? CONTENT: Keep an Eye on Your Credit Score\n--------------------------------\nIt's generally a good idea to get in the habit of monitoring your credit score as an indicator of your overall financial health, and doing so during a focused effort to pay down debt can be a great motivator. Be aware, however, that using a balance transfer could cause your credit score to dip some before it starts to climb. There are a couple of reasons for that:\n*   Any time you apply for and open a new loan or credit card account, your credit score typically drops a few points, both because your lender performs a hard inquiry to check your credit before deciding whether to accept your application and because, in the statistical analysis used by credit scoring systems, whenever you increase your overall borrowing limit, you are considered at greater risk of being able to pay your bills. After a few months of keeping up with your payments, your score will likely recover from this dip.\n*   The balances transferred to your new card may give it a high utilization rate. Credit scoring systems such as the FICO® Score☉ and VantageScore® consider a measurement known as a credit utilization ratio, or how much of your available credit you're using, when calculating your scores. Experts recommend staying under about 30% utilization to avoid hurting your credit score.\nScoring systems give heavy consideration to your overall utilization—the sum of all of your credit card balances divided by the sum of all your borrowing limits—but they also look at the utilization for each of your individual cards. Making a balance transfer generally reduces your overall utilization by increasing your overall borrowing limit without adding to your outstanding balances. But if the utilization on your old cards was under 30% and the transfers (plus fees) make the utilization on the new card exceed 30%, your credit score may decline as a result.\nThese initial score dips are normal and, like all declines in credit score, reversible. Within a few months of a concerted effort to pay down your debt, you can expect to see your score increase—as long as you resist the urge to add to your credit card balances. END