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I have a really good credit score right now (somewhere upwards of 750).  This is extremely important to me, because I really want to qualify for a good mortgage rate, and well, just because.  I know that several factors affect how my FICO score is calculated (for example, the credit bureau takes into account the number of inquiries, my payment history, my debt to credit ratio, and how my debt compares to my income).  

I try to be very careful about opening new accounts.  I signed up once and got a free credit analysis from True Credit, and one of their “negatives” to me was that I had too many inquiries.  However, I am seriously entertaining the thought of applying for a credit card offering a low (3.99%) interest rate for the life of the balance.  

I’m considering this for a few reasons.  My Fiance has some credit card debt that we would like to consolidate.  I also have some private loans, and some Graduate Plus Loans that are at 7% and 7.5% respectively.  I would very much like to be able to transfer the whole balance of these 3 things (about $50,000 total) to this card.  

Unfortunately, I doubt that such a thing would be possible. I don’t think anyone is going to give me $50,000 in credit considering my current income (although, given the apparent easy-credit society I’m living in, perhaps I’m wrong in thinking this).  I don’t want to apply jointly with Fiance, because my credit is much better than his.  And, I don’t want to take such a huge line of credit because of the hit to my credit report.

However, I am entertaining the idea of opening a card and trying to get a line of credit at approximately $10,000.  The way the offer is structured, I can essentially write the “balance transfer” check to myself and do whatever I want with it.  We would pay $5000 to Fiances cards, and $5000 to my 2 loans (essentially, we’d wipe out the interest that has accrued on the loans since I have been in school).  

I’m concerned about a few things though.  I need to find out more details about how the loan is structured.  What I would like to do is pay only the minimums on the $10,000, until all of my stuff at a higher interest rate is paid off in full.  I have to calculate what the minimum payment would be.  I also need to figure out whether this is even possible to do.  The offer clearly states that the interest rate is 3.99% for the life of the balance, but I want to make absolutely sure there is no fine print which limits this to a certain period of time.  I also need to figure out how long it would take me to pay off the $10,000 if I make only minimum payments.

However, my biggest concern is what this would do to my FICO score.  I will be taking out a new line of credit, so I’ll have the hit of a hard inquiry.  That lowers my score.  I will also be using the full amount of credit available to me on that card.  That doesn’t look so good, as far as the calculation of my debt-to-credit ratio.  Of course, I will be showing a large payment made on each of my 2 student loans, so that might be good.  And I’ll consistently pay this card on time, all the time.  Since I have only one major credit card, and the credit bureau’s like to see diverse debts, that could help the score.  

I wish that the bureau was more clear about exactly how the score is calculated, how the numbers are rated, and how everything factors in so I could be exactly sure what this move would do to my credit.  Provided that I get all my questions answered in an acceptable matter, it certainly seems to make financial sense to me to take debt that is at higher rates and move it to lower rates.  I don’t know why FICO would penalize me for what is obviously a better financial decision.  

Anyway, I’ll keep you updated as I get answers to my questions through further research.  Also, if any of you have done balance transfers, please post and let me know if you have advice on how it works or info on what it did to your credit report!