Credit Card Myth #2

Myth #2: Consolidating Debt Onto 1, Low-Interest Credit Card Will Increase Your Scores – FALSE!

Everyone gets the offers: “Dig yourself out of your financial hole with a balance transfer.” They tempt you with big checks, one with your name printed on it. “Take a vacation. Improve your home. Or, just consolidate your debt. These checks are yours to do whatever you want.” Sounds great, doesn’t it? And it would be great except for the fact that if you consolidate all of your debt onto one credit card, you will max out that card and your credit score will drop 80-100 points overnight! Oops, they forgot to tell you that, right! Per Fair Isaac, if you have a maxed-out balance reported on your credit card statement, you can lose 75+ points instantly, regardless of how good your credit history is. Do not consolidate your credit card debt onto one low interest card UNLESS if after transferring the debt the balance on the credit card you are transferring to is under 30% of the available limit.
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