I happen to have an exceptional credit score and do not want to do anything to ruin it. To save on interest, I am considering transferring a $3,800 installment loan (currently at 8.9%) to a credit card that offers 3.9% for the life of the loan. My credit card company told me it would have no affect on my FICO score if I were to transfer the installment loan balance to it. However, I an not so sure that what they are saying is true. I do know that carrying a higher balance on my credit card(s) will have more of a negative affect on my FICO score than maintaining the installment loans. Any thoughts?
I have heard that installment loans pull FICO down more than CC debt, but I have no direct experience. What total CC debt will you have, out of what total available CC credit?
I have a total of $64,900 in available credit on my credit cards . Only $3,330.78 balance outstanding. In addition, I am paying off installment loan of $3,826.80 left on a $10,000loan @8.9% and auto loan of $4,306.61 left on a $11,100 loan @ 6.45%. The majority of the CC balance is on a 0% rate card (good until 4/06) with $16,500 avail credit. I received an offer from another credit card co. for a 3.9% bal transfer for the life of the balance. That card currently has a 0 o/s balance with $10,400 avail credit. However, it charges a bal tsf fee. The 0% card does not charge a fee to tsf balances. If I were to do this, I would only be interested in transferring the installment loan, which has the higher interest rate. Any suggestions on how I should handle this without jeopardizing my exceptional credit rating?
It does not appear to me that going from around $4K to around $8K total CC balances would make much difference in FICO, considering your installment debt would go to 0, if all your accounts are paid as agreed, with a long history, which is likely with high scores and $64K available credit. Assuming you want high scores for, say, a mortgage, or refinancing one, your actual debt to income hasn't even changed, yet your monthly cash outflow to service debt may actually go down. The key remaining piece ocnsidered by a lender would be your income, which is not directly reflected in FICO. Presumably, if you can carry $8k at one set of rates, you can do the same at lower rates.
Other factors to consider are: Effect of inquiries for the new account on FICO for, say, the next 6 months. Probably minor. Transfer fees, if any. What good is 4% interest, say, if they took 3% up front, you would be paying about 7% the first year. 3% capped at $50 is only a little better. Reliability of the CC company you are BTing to. If they tend to screw up, you don't need them. If your credit is golden, you don't do business with anyone who doesn't have the same standards. Availability of a BT out if they do screw up. No bait and switch. You're paying good money to borrow money, a commodity. You want best price, no hassle. It's just business.
