Mortgage Guideline Tip - Maintain Your FICO Score With Balance Transfers

Boosting you credit can take time, patience, and effort.  A tool to consider when boosting, or even maintaining your credit is balance transfers.

Here are some important things to remember when considering a balance transfer.

• Consolidating simplifies payments.  
• Some of our clients have a large number of credit accounts, which can cause them to struggle to pay their payments on time.  This is not always because of affordability.  Sometimes it is because they have so many accounts they cannot keep up with all of the due dates.  Transferring your balances would minimize your due dates each month.
• Saving while paying.
• There are clients who can't afford to pay more than the minimum payment on their accounts.  They may have a high interest rate and although they are paying on time, they don't see their total balance going down.  Generally when transferring a balance, there will be an introductory period of 0% interest or very low interest.  So if a person has been comfortable paying $300 a month to a credit account with high interest, they can transfer their balance and continue to pay $300 and have more of their payment go to the principle.
• That introductory period of low interest does end.  It varies by company but it is usually between 12-18 months.  Make sure you make your payments accordingly and be aware of what the interest rate will jump to.
• Don't make re-transferring your strategy. 
• Are you planning on applying for a new balance transfer when your low interest introductory period ends?  I would advise a different strategy because that plan can damage your credit score.  It can also make you seem like a high risk borrower if lenders see you continuing to transfer high balances.
• Do your research.
• There are several companies that promote balance transfers.  Some will only work with those with excellent credit while others are more lenient.  Make sure you know when the interest rate will kick in and what it will be.

As always, please do not hesitate to contact me with any questions! We can help you figure out if transferring your balance is the right move for you and your credit.