Learn what credit card issuers look for — and how to best appeal to them.
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.
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.
Compare balance transfer credit cards
Step one: Check your credit score
Your credit score weighs heavily in a card provider’s approval or rejection of your application.
Credit defaults, late payments, court orders and bankruptcy number among credit report marks that could label you as a high-risk applicant. Sometimes there can be mistakes in your report too, which can and should be rectified by the credit reporting agencies.
Step two: Check your credit card balance
You’re going to need to know your existing credit card balance when you apply for a balance transfer. It’s important to get the most up-to-date figure of your card debt so that you can balance transfer the whole amount.
Checking your balance online can be the easiest way to get this information, but your online balance may not reflect the total amount you need to pay in order to clear the account. It’s safer to call your current card provider and ask them for the actual figure to balance transfer.
Step three: Compare a range of cards
Finding a card that’s right for you is possibly the most important step.
First, you’ll want to compare the balance transfer offer. Most strong balance transfer credit cards offer a promotional APR of 0% that can last between 3 and 21 months.
Make sure that the length of the promotional period is long enough for you to pay off your debt in full. Otherwise, the remaining amount will continue to accrue interest.
You’ll also want to consider other features such as the annual fee, balance transfer fee, and other interest rates to make sure that the cost of the card doesn’t outweigh the savings you’ll earn from your balance transfer.
Step four: Make all minimum payments and then some
Avoid falling into default, or get out of it, by making at least the minimum payments on all of your accounts.
Paying down your debt principal significantly, however, can improve your credit utilization rate and help bump up your credit score.
Step five: Stop using your current credit cards
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.
Not using a card doesn’t necessarily mean you should close it. 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.
Should I apply right now?
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 criterion, 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.
Top 4 balance transfer eligibility factors
Credit history and score
Your credit use, habits and history provide a record that allows credit issuers to see what you’re 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.
The better your credit 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.
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.
Your debit-to-income ratio compares two numbers — the total amount you owe and the total amount you make. This results 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 are typically broken down as follows:
- Under 15% = Good
- 15%–20% = Caution
- Over 20% = Danger
That puts the 27.5% ratio in the danger zone.
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.
Some credit card providers allow you to prequalify for their products. Prequalification doesn’t guarantee approval, but it can give you a better idea of if you’re a strong applicant.
Providers that offer prequalification include:
Will 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 completely ruin your credit or make you ineligible for future cards.
Hard and soft credit pulls
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.
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 denial itself isn’t typically on your report, because the report is a record of opened and closed accounts.
However, if you repeatedly apply for more loans and credit cards, the inquiries on their own could hurt your credit score.
Balance transfer calculator
What to do when you get your balance transfer credit card
Once your application is approved, you can expect your new card to arrive within five to 10 business days. After that, it’s only a matter of activating your new card, which you can do online, over the phone or in person at a branch office. This step will initiate the balance transfer process, which can take several weeks to process.
Use this time to tie up any loose ends with your old credit card. Check your old account for any other fees that may have popped up, pay them off and consider closing the account to avoid any future fees.
Now that you’re ready to get started on this balance transfer application, take your time and follow the steps we’ve outlined. Doing your research well and planning ahead will increase your chances of a successful application. Remember: when in doubt, always ask for help.