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mnc2597

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87 People Helped
Balance transfer vs. payoff
I've been paying off my credit cards and expect to have zero credit card debt as of next month, but I've noticed that the credit score simulator gives me double the score increase for transferring the balances to a new card than I get for just paying them all off. Why would simply transferring the debt be better for my score than eliminating it, and would it be worth it to transfer the 2 remaining balances to another card?

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Everyone is a little different.  If you have excessive credit cards meaning 5+ than paying off some and closing them but not all would be the best to reduce your debt and still maintaining a good score.  Now if you have few cards like less than 3 it's best to transfer the debt across the board.  In that case you should distribute the debt to no more than 30% of the available credit for each card.  This formula will give you better scores rather than paying 1 or 2 to a 0 balance.  Remember a 0 balance gives you a 0% utilization which in return reduces your scores.  A 1% utilization is better than 0% utilization.

Regards.

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