Learn what credit card issuers look for — and how to increase your approval odds.
You’ve done your homework. You’ve found the balance transfer card that meets your needs. You’ve scoped out an offer with a credit limit that lines up with how much debt you have. And you even know how much you need to repay to pay off the debt during the no-interest period.
Now learn about options that apply to your specific situation — your debt balance, the types of accounts you’re paying off, your current income and your credit history.
What's in this guide?
Should I click “apply” right now?
One major issue stands in your way: your fear of rejection.
To make sure that you’re not applying for an offer that won’t pan out, take a look at out how credit issuers evaluate your application. By nailing down this success criteria, you can be the one calling the shots.
Once you’ve learned the factors that matter, you’ll have the tools to become a strong candidate and apply with confidence.
Five basic steps to improve your approval odds
Here’s how to easily make yourself a stronger balance transfer credit applicant.
- Make all minimum payments. Pay your minimum to get any outstanding loans out of default.
- Pay down your debt principal. Use a bigger amount of money — like your tax return — to pick away at your principle and improve your credit utilization rate.
- Refrain from closing old accounts. Credit bureaus look favorably on long relationships with credit card providers. Preserve the length of your credit history by putting any card you no longer wish to use in a drawer so that you’re not tempted to use it.
- Stop using the credit cards you have. Bring your debt-to-limit ratio down as you make more payments. A low debt-to-limit ratio is better for your credit history, because it means you aren’t spending too close to your allowable credit limit.
- Track the accounts you already have. Write down the due dates, minimum payment requirements, interest rates and total amount owed. Credit bureaus look favorably on people who make payments on time every month.
Recently applied and not sure about your application status?
Call your provider’s customer service line to find out if you’ve been approved or rejected — and why.
Will applying and getting denied for a balance transfer ruin your credit score?
Applying for a credit card typically involves a credit issuer “pulling your credit,” which could affect your credit score. However, neither applying nor getting rejected for a balance transfer will ruin your credit or make you ineligible for future cards.
What “pulling your credit” means
When you apply for a balance transfer card, the credit issuer will do what is referred to as a hard pull. This means that it contacts the three major credit bureaus to get your credit score. This action remains on your credit report for two years.
If you’re applying to one card, the impact of this inquiry on your credit history should not be significant — potentially lowering your score by a few points. However, the more inquiries you make or applications you complete, the more points you can lose.
Quick note: Your credit report may include soft pulls, which do not impact your credit score. Soft pulls refer to those situations in which you check your own credit or are preapproved for a credit offer.
What an application denial does to your score
While multiple hard credit inquiries from issuers could ding your credit score, getting denied for a credit card application should not. The denied account itself isn’t typically on your report, because the report is a record of opened or closed accounts.
However, if you repeatedly apply for more loans and credit cards, the inquiries on their own could hurt you.
Can I use the same credit issuer to reduce debt?No. Let’s say you have the Chase Freedom Card with a debt balance you can’t seem to reduce. You’re trying to get back on track and find an offer for a Chase Sapphire Card with a balance transfer promotion. It’s a different card, so you qualify for the deal — right?
Unfortunately, this isn’t how it works. You will need to apply with a different credit issuer to “move your debt.”
Credit Issuers offers these deals because they’re competitors. They want to earn your business from a competing bank, not their own bank. To be considered for an offer, make sure you’re not applying to a company you already have an account with or one of its affiliates.
How do credit issuers make approval or denial decisions?
When you’re considering a new balance transfer card, you might scan the list of perks and then start reading about requirements. Some of these will be easy to interpret, with clear numbers and simple bottom lines. As you move through the terms and conditions, however, things can get a little hazy.
Some of this is intentional: Credit issuers have their own special formulas for making decisions, and parts of that process are unique. Also, each applicant comes to an issuer with different needs and histories. Because of this, a combination of “case evaluation” (which may work in your favor) and “set procedures” decides who qualifies — and who doesn’t.
Gauge the strength of your case for getting an approval by looking closely at the following eligibility factors.
Top 4 balance transfer eligibility factors
1. Credit history and score.
Your credit use, habits and history provide a record that allows credit issuers to see what you are like as a potential lending candidate. Are you someone with a long credit history? Do you typically make payments on time, or do you have loans in default? To an issuer, the answers indicate how you’ll behave as a future borrower.
Say you have an account balance but you pay on time and have had a credit card for a few years. Does this mean you have good credit?
The process of building good credit is a little more complicated than that. Let’s check out the hard numbers.
What qualifies as good credit?
Why your credit score is important.
The better your score and repayment habits, the more money a company will be willing to loan you. Higher credit scores also tend to mean that your credit limit will be higher and your interest rate lower.
2. Amount and type of debt.
The balances you owe on other accounts is another hard number that credit issuers consider. In many cases, if you have a large balance it will be critical for you to have a good score to be eligible for the transfer. These factors will work together to prove to the lender that you will be able to pay off your debt balance.
The type of debt you have is another indicator of your ability to use credit responsibly. If you have a student loan or home equity line with low payments and low interest that you consistently pay on time, it offers a stronger case than having three store credit cards with maxed-out limits.
While carrying different types of debt won’t prevent you from being approved for a balance transfer, to issuers it is another reflection of your spending habits.
3. Debt-to-income ratio
Your debit-to-income ratio compares two numbers — the total amount you owe and the total amount you make — resulting in a number that indicates to an issuer how significant your debt is. It also shows how capable you are off paying off that debt.
Debt / Income = Debt-to-income ratio
For example, it you owe payments of $1,100 every month and your monthly income is $4,000, you’d calculate your debt-to-income ratio like this:
$1,100 / $4,000 = 0.275
That 0.275 means that 27.5% — or about a third of your income — goes toward your debts.
|DEBT-TO-INCOME RATIO LEVELS|
A 27.5% debt-to-income ratio is typically in the debt-level danger zone.
A credit issuer will compare these two numbers to gauge your ability to repay the money you’ve borrowed — and whether you can handle borrowing more.
It may sound like we’ve covered income already. But while it’s covered in the debit-to-income ratio, it’s a significant factor on its own. For instance, you may not have a large debt balance, but you could still be in a tight spot if your interest payments are high relative to your income.
Again, this factor is an indicator to a credit issuer of how well you will manage to repay your debt with your new balance transfer credit card.
Real balance transfer options for real people
5 tips before taking the leap into a balance transfer application
- Research your options. Take a look at the balance transfer cards offers out there to find one that fits your unique financial situation.
- Plan your repayment strategy. You don’t want to sign up for a 0% rate only to find that you’re unable to make the payments within 9 to 18 months, depending on the card you choose.
- Read the fine print carefully. Before you complete forms and send in your paperwork, research any complex credit jargon that still isn’t making sense.
- Weigh alternative options. You may be able to negotiate with the banks you already have an account with or take out a personal loan.
- Take time to ask questions. Ask the credit issuer to clarify the application process or credit terms, and don’t rush into a decision if you’re not ready.
Balance transfer calculator
Your current credit cards:
Card that you are transferring to:
Intro Term (months)
Balance Transfer Fee
Your monthly repayment
At this rate, you will not pay off your debt.
At this rate you will pay off your debt during the card's intro period
At that rate you will not pay off your debt. You will need to make higher repayments.
Months that it will take you to pay off your debt:
With a balance transfer
Without a balance transfer
Money saved transferring debt to a balance transfer card:
Savings = $1,000