More On What Affects Your Credit Score

Dear Credit Karma,
How could moving affect my credit score?

Moving from one home to another will not directly affect your credit score, but beware of any fallout that may occur with misplaced bills that could end up hurting your credit score.

When you move, make sure you update your new address for all financially-sensitive mail like credit card statements, utility bills, and loan payments. Remember, it takes a week or so to have your mail forwarded. These changes can get lost in the transition of moving and ultimately hurt your credit score. Missing or paying late on a bill just because you didn’t receive it at your new home and forgot to take care of it will deal an unnecessary blow to your credit score. Also, if you left your previous home because of an eviction (which may be reported on your credit report, depending on your landowner) or a foreclosure (can cost up to 160 points in damage to your credit score), it will negatively affect your credit score.

Additionally, any new mortgage or unsecured loans you take out or new retail/credit cards you open up in your new neighborhood will change your credit utilization and add more lines of credit to your credit report—two key components of your credit score. These actions will typically benefit your credit score by a few points, which you can estimate in the Credit Karma Credit Simulator. Make sure staying on top of your financial responsibilities is at the top of your moving to-do list.

Dear Credit Karma,
How would my credit score be affected if I transfer the credit limit from my newest credit card account to an older credit card account and then close the newest credit card account?

Transferring the credit limit of one credit card to another is not very common and its difficult to say how it will affect your credit score. In some instances, an issuer may let you combine the credit limit of two credit cards if from the same issuer, which will increase the limit on one card and likely effectively close the other. In some cases, closing a credit card can result in a drop in your credit score depending on factors such as how long you’ve had the card, if you have an outstanding balance, and the health of the rest of your credit report.

A credit action you can definitely take is to transfer your credit balance from one credit card to another, which will almost always have an impact on your score depending on how the transfer is done.

Doing a balance transfer between two cards, in which you transfer the credit card balance of one credit card to another card with lower interest, is a strategy to pay down debt faster by saving money paying little to no interest charges on your month-to-month balance. Transferring the credit balance to an older credit card won’t affect your score because you aren’t changing your credit utilization—i.e the total credit card debt you have compared to the total available credit on all your credit cards. This type of balance transfer may end up costing you money, since it will likely charge a balance transfer fee of about 5% and will have a high APR for balance transfers (can be upwards of 20% APR). Look to use a card with a 0% transfer fee to avoid these charges.

However, if you opened a NEW credit card and transferred your balance, this could improve your score. Adding more credit and boosting your credit limit will lower your credit utilization which can boost your credit score (under 35% utilization is favorable), and if your new card comes with a 6-12 month 0% APR on balance transfers promotion, you can pay off your debt faster to improve your credit score.

Whatever method you choose, don’t close the credit card after you’ve made the balance transfer as your credit utilization will drop and your score will be negatively affected.