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Balance Transfers

How A Balance Transfer To Your Spouse Can Affect Your Credit Score

Dear Experian,

I have a question about balance transfers. I have a credit card with a balance that I am paying interest on. My husband has an existing credit card balance transfer offer at 0% for 12 months. That card is under his name and it has no balance. If I transfer my balance to his offer, how will that affect our credit score? Also, do any balance transfers affect your credit scores as long as you do not utilize any of the accounts after the transaction?

- STN

Dear STN,

Transferring a balance from a credit card that is in your name to one that is in your spouse's name only would affect both of your credit reports and scores. Even though you are married, you and your spouse have separate credit reports. You also will have separate credit scores because your credit reports will be scored individually when you apply for credit.

How Transferring a Balance Could Impact Credit Scores

Your report would reflect that the balance had been paid in full, which might help your scores, because your utilization rate, also called your balance to limit ratio, will decrease. However, if you were to then close the account or stop using it altogether, you would lose the positives of having an open, active credit card account which helps your score if you make all your payments on time and keep your balance low. And, closing a credit card can impact your credit scores if it causes your overall utilization rate to increase.

On the other hand, your husband's report would reflect an increase in his utilization rate because the additional debt is being added to his credit account. That could harm his scores, especially if he already has high balances on other accounts.

Request a Credit Score to See Your Risk Factors

For more insight before making a decision, you can order a free copy of both of your personal credit reports through Annual Credit Report.com or through Experian. You can also request a free credit score for each of you. Your credit scores will include a list of the risk factors that are most affecting your individual credit scores.

If your husband's risk factors indicate that the balances on his credit cards are too high, you may decide against adding to his overall balance. Conversely, if your husband has no outstanding balances and you do, it may make sense to go ahead with the transfer.

And, if both of you have a strong credit history and high credit scores, , then making the decision to transfer the balance should be based on what makes the best financial sense to save money and not just the impact on your scores.

Understand Terms and Fees Before Agreeing to Balance Transfer

Using an account after making a balance transfer may trigger contractual actions by the lender such as increased interest rates or fees, but that has no bearing on your credit report. Make sure you fully understand all the fees associated with the transfer and how much it will cost you if you have not paid the balance in full at the end of the 12 months and then make the decision that is best for both of you.

Thanks for asking.
The "Ask Experian" team

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