Pam asks: Three years ago I racked up debts on several credit cards. I paid those cards off and closed them. Today, my only card has a 19 percent APR and no rewards. My credit score is only about 600 because I was (quite) late a few times. Today, I am debt free except for $3,000 on this card. I’ll pay it off in a year, but I hate paying 19 percent interest. Can I qualify for a balance transfer credit card?
Unfortunately, your credit score is still too poor to qualify for 0 percent balance transfer cards.
If you apply to these cards, you’ll most likely be denied because of the late payments. Typically these credit cards will require applicants with FICO scores of at least 700.
That’s not to say, however, that somebody with a lower score would never be approved, or somebody with a high score would always be approved. Credit cards look at other factors besides your score, like your income and job history, your current level of indebtedness, how recently and frequently you made late payments, and other factors.
For example, if the $3,000 balance is your only debt and it’s been several years since your last late payment, your approval odds would be better than if you had a lot of debt and made a late payment in the last 12 months. Still, your credit score is the best measure of your creditworthiness, and 600 is not a very good score.
If you do apply for these cards, note that every application for credit will lower your score, but only slightly. Making timely payments to your creditors and reducing your total debt are the most important things you can do to improve your score.
Whatever you do, avoid applying for credit cards with high fees and/or high interest rates just to get a new credit card. While adding one or two new accounts and managing them responsibly will help your credit score, it shouldn’t cost you an arm and a leg to do. Worst case scenario, wait for your credit to improve and reapply for a “prime” card.
Two final tips: If you are successful transferring your balance, don’t close that old card just yet, as closing a credit card can hurt your credit score. By all means avoid carrying a balance on it; just don’t close it.
If you aren’t successful transferring your balance, try calling your current card company and asking for a better interest rate. Point out that you have been responsibly paying on time and mention that you are shopping for new cards.
Have you been approved for good credit card deals with less-than-perfect credit? Turned down for any cards even though you have good credit? I’d love to hear.