How does a balance transfer affect your credit rating?

Learn how a balance transfer can affect your credit rating and what you can do to ensure it has a positive impact on your credit score.

When used correctly balance transfer offers help you repay your debt and improve your credit score. Thirty percent of your credit history is based on your outstanding debt. Balance transfers allow you to repay your outstanding debt at a lower interest rate and save money, creating a positive effect on your credit. However submitting too many credit card applications within a short period of time will negatively affect your credit score and give lenders the impression to lenders that you have a lot of debt, even if this isn't the case. As a result it is important to compare balance transfer offers and choose a card that meets your needs.

Here we've unpacked how a balance transfer can affect your credit history and the easy steps you can follow to ensure it has a positive impact on your credit score.

Get Your Free Credit Score First

How can a balance transfer affect my credit rating?

Your credit file contains details of your entire credit history. It contains records of the type of credit you've been approved or rejected for, your payment history, enquiries for credit, the age of your accounts and credit usage, each of which have an impact on your overall credit score. You can expect lenders to go through your credit file each time you apply for a new credit card.

Here are some of the ways a balance transfer could affect your credit rating:

  • Status and number of applications. If you apply for a balance transfer and are rejected, this will have a negative impact on your account. Applying for several credit cards at the same time or within a short period of time will have a similar outcome on your file. New credit accounts constitute 10% of your credit history, so it's important to consider this when applying for a new card.
  • Repayment history. If you are approved for a balance transfer but are unable to meet the regular minimum repayments and can't repay your balance by the end of the promotional period, thereby increasing your level of debt, this could have a negative impact on your credit score.
  • Remaining accounts. If you fail to close your old account after you've transferred your balance to a new card, this can have a negative impact on your credit score unless you're making regularly repayments on both accounts.
  • Multiple transfers. If you're unable to repay your debt by the end of the promotional period and have to move the remaining amount to another balance transfer credit card, this can also look bad on your credit file.

What goes into my credit history?

Credit card details

Percentage of credit file

Payment history


Outstanding debt


Established credit


Credit limit


Type of credit


How to understand your Equifax Score

How can I prevent my balance transfer from having a negative impact on my credit rating?

There are a few easy steps you can follow to keep your credit file in good standing when conducting a balance transfer:

  • Don’t apply too often. When applying for credit cards, try to spread your applications over six months or one year periods. Applying for new cards over a longer period of time will have a less of an impact on your credit file.
  • Review terms and conditions. Go through the balance transfer offer terms and conditions at the very onset. Account for all applicable fees, including any hidden charges, ongoing annual fees and calculate whether you can afford the card. You'll also need to confirm whether you meet all of the eligibility requirements, such as minimum income, credit score and residency, and that you have all of the required documents to ensure your application isn't rejected.
  • Pay on time. Making a late payment can result in the termination of the promotional balance transfer offer, so do your best to repay your balance on time. By repaying the entire balance before the promotional period ends, you demonstrate your willingness and ability to repay outstanding debts, and you can expect lenders to view this with favour. Not repaying the entire balance before the promotional period ends would have you paying higher interest on any outstanding balance, and can also impact your ability to get a new card.
  • Avoid new purchases. Avoid making purchases during the balance transfer period, as this could increase your debt. Your repayments will automatically go towards whichever debt accrues a higher interest, which is more than likely going to be the purchase if a low or 0% balance transfer rate is in place. This means that you’ll be wasting funds you could be using to consolidate your debts to repay purchases. Again, your inability to repay your balance can have a negative impact on your credit score.

Understanding your debt to credit ratio

If you’re looking at maintaining good credit history or improving your credit history, knowing how debt to credit ratio works can help, because this often plays a role in a lender’s willingness to offer credit. The debt to credit ratio essentially points out how much of your available credit you’ve utilised.

Case Study

If you, for example, have a credit card with a credit limit of $20,000, and your last closing balance was $6,000, you’ve used 30% of your card’s available limit, and your debt to credit ratio is also 30%. While there is no strict benchmark in place, it’s common for lenders to show less interest in lending to individuals who have high utilisation rates, and getting a new card for a balance transfer can affect this ratio.
A low debt to credit ratio is always good, and debt to credit ratio of around 30% should not have any adverse effect on your creditworthiness.

Similar to any type of credit card, a balance transfer credit card can have a negative impact on your credit rating. Researching and comparing your balance transfer credit card options beforehand will ensure you're applying a card that you're both eligible for and can afford, increasing your likelihood of approval. Managing your card with a budget in mind and doing your best to repay your balance before the promotional period ends is another way you can reduce the impact a balance transfer has on your credit card. Balance transfers can be a great way to consolidate your debt without the cost of interest, but conducting research and managing your finances is crucial if you want to reduce the impact it could have on your file.

The fine print of balance transfer

Frequently asked questions

Back to top
Was this content helpful to you? No  Yes

Related Posts

Credit Card Offers

Important Information*
Westpac Low Rate - Online Offer
Westpac Low Rate - Online Offer

Interest rate


Annual fee

HSBC Platinum Credit Card
HSBC Platinum Credit Card

Interest rate


Annual fee

NAB Low Fee Card
NAB Low Fee Card

Interest rate


Annual fee

Citi Platinum Credit Card - 100k Bonus Points
Citi Platinum Credit Card - 100k Bonus Points

Interest rate


Annual fee


Ask an Expert

You are about to post a question on

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms and Conditions and Privacy Policy.

2 Responses

  1. Default Gravatar
    KenOctober 20, 2015

    Does a balance of a credit card appear on your credit history if it hasn’t been due yet such as the 60 days has not been reached yet?

    • Staff
      JonathanOctober 23, 2015Staff

      Hi Ken, thanks for your inquiry!

      An overdue balance will only appear on a credit file after the statement is due.



Ask a question
Go to site