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I wrote a post here discussing whether I should take a balance transfer or not.  I ultimately did apply for a Citi Upromise Platinum Select Card and got approved for a $7000 line of credit.  I requested a balance transfer check for $6850 of that which allowed DF to pay off 2 of his cards and pay the bulk of what he needed to get the tax deduction for his student loan interest (his loans are in deferment until his cards get paid off, but he needs to pay $2500 in interest annually to get the $2500 tax deduction).

It made a lot of financial sense for us to take this deal, especially since there was no fee, and the cards of DF’s that we paid off were somewhat higher interest cards.  However, as I mentioned in my earlier post I’ve worked very hard to get a good credit score.  I checked my score on Credit Karma right before doing the balance transfer and I was at 796.  Now, after I did the transfer, Credit Karma puts me at 740.  That doesn’t seem so bad… 

However, checking my FICO score was somewhat more alarming!  Now, I didn’t check my actual FICO score right before I made this transfer (since it costs money!), but I know last year I was at a 786 when we bought our car last year.  It stands to reason that this score should have been at around a 786 or perhaps even higher, since I paid off the car and have had no new inquiries since then, until this whole balance transfer adventure.  Unfortunately, (and alarmingly!), when I checked, my score was a 690.  This is like a 100 point drop!!  

So, what caused the drop?  I think it is a combination of 3 things.  First, I had 2 inquiries when I opened the Upromise Card because they give me a teeny tiny credit limit the first time and I had to call to ask them to raise it.  Second, I’ve never really had a balance on the card, and now I have a balance that takes up almost all of the available credit on that card ($6850/7000).  Third, this is a new card so it lowered the average age of my cards.  

For those that don’t know, these are the factors that go into determining your FICO Score:

35% - Payment History
30% - Amounts You Owe
15% - Length of Your Credit History
10% - Types of Credit Used
10% - New Credit