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A balance transfer can be a good way to pay down credit card debt. But, depending on several factors, balance transfers can either help your credit score or hurt it.

By initially applying for several different cards with low introductory rates, you can negatively affect your credit. Fifteen percent of your credit score is based on the length of time your credit accounts have been open. The longer you have your accounts, the better your score. By opening several new accounts, you bring down the average age of all your credit accounts, thereby hurting your credit.

Every time you apply for credit, a hard inquiry is made on your credit report. Each hard inquiry has the potential to lower your score by 35 points. If you apply for five different cards, you could lower your credit score by up to 175 points. To keep the negative effect on your credit at minimum through the application process, do your research and only apply for one card.

After transferring a balance to a new card, keep the old account open.Why? Because closing an account can negatively affect your credit score. By keeping existing accounts open, your average account age remains high.

If possible, find a card with a credit limit much higher than the amount you need to transfer. Exhausting your credit limit increases your credit utilization ratio (your debt as a percentage of your available funds), which accounts for 30% of your score. Conversely, if you increase the amount of credit available to you, the money owed becomes a smaller percentage of the whole – you are less "maxed out" – and your credit utilization ratio goes down.

In the long run, balance transfers can improve your credit score if the transfer makes it easier and faster to pay down your outstanding debt. Of course, you will make those payments on time – a crucial part of maintaining a good credit score; doing so will burnish your credit history, too.

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