Does a balance transfer affect your credit score?

Written byEmily Tye

Updated:Feb 11, 2026

5 min read

A balance transfer can improve your score over the long-term by helping you to reduce your overall debt and lower your credit utilisation ratio. However, a hard enquiry on your credit report and a reduced average account age can cause a small dip to your score in the short-term.

Key takeaways

• A balance transfer can improve your credit score if you use it to reduce your debt, lower your credit utilisation, and maintain a positive payment history.

• A balance transfer can cause a short-term dip in your score by lowering your average account age, and as a result of the initial hard credit check.

• If used correctly to pay off debt, the long-term benefits should generally outweigh the short-term dips.

How can a balance transfer improve your credit score​?

1. Reduces your debt

Many balance transfer cards have an introductory period with low or no interest. For example, you may have a 0% interest rate on balance transfers for the first 6 months. 

If you use the money you save in interest to pay down your balance, you can reduce your overall debt. 

Decreasing your debt over time can have a significant positive impact on your credit score.

2. Lowers your credit utilisation 

Your credit utilisation is the percentage you use of your credit limit. For example, if you have a £1,000 credit limit and a £500 balance, your credit utilisation is 50%. The general rule of thumb is to try to keep your overall credit utilisation below 30%. 

When you open a new balance transfer card, your total credit limit goes up (so long as you keep your old cards open). If you don’t add more debt, you’re using a smaller percentage of your available credit. Or in other words, you’ve lowered your credit utilisation. This can have a positive effect on your credit score.

Example

Before a balance transfer:

• Card A: £2,000 credit limit | £1,500 balance

• Card B: £2,000 credit limit | £1,500 balance

Old totals:

• Total credit limit: £4,000

• Total debt: £3,000

• Utilisation: 75% (£3,000 / £4,000 x 100)

After a balance transfer:

Let’s say you got a new balance transfer card with a £4,000 limit and moved that £3,000 of debt onto it. Now, your available credit limit has grown, but your debt has stayed the same.

New totals:

• Total credit limit: £8,000 (your original £4,000 + the new £4,000)

• Total debt: £3,000 (still the same amount of money owed)

• Utilisation: 37.5% (£3,000 / £8,000 x 100) 

You went from 75% down to 37.5% overnight without actually paying off a penny of the debt yet. The more you reduce your debt, the lower that percentage will become.

3. Builds a positive payment history

Making your payments on time on your new card (and any other cards you still owe on) is one of the most important factors when it comes to improving your credit score. 

Having just one credit card bill to pay each month, as opposed to several, may help ensure you don’t miss a due date, but we still recommend setting up automatic payments or reminders. 

"A balance transfer credit card can help your credit score in the long run if you use the interest free period to pay down your balance faster. The dip in your score from the credit check to get the card is usually minor and temporary if you then pay down your balance which also reduces your utilisation."

How can a balance transfer lower your credit score​?

1. When the average age of your credit history decreases

Lenders value long credit histories because it suggests that the individual is an experienced borrower and likely to manage their credit responsibly.

Each time you open a new credit card, the average age of your credit history decreases. This can cause a temporary drop in your score. However, if you use your balance transfer card strategically to pay off your debt and lower your utilisation, the benefit should outweigh this.

Tip: Avoid closing older accounts so you don’t further lower your average account age. This also ensures you get the benefit of the lower credit utilisation percentage. 

2. When you receive a hard credit check

In order to get a new balance transfer credit card, a lender will need to carry out a hard credit check. This can cause a short-term dip in your score. Applying for several cards in a short period can amplify this effect. 

Again, as long as you use your balance transfer card responsibly, the longer-term benefits should outweigh this short-term dip.

How to reduce the chances of negative impact to your score

1. Don't apply for multiple balance transfer cards at once

Several hard enquiries on your credit report can suggest to lenders that you may be struggling to manage your money.

Instead of completing multiple full applications for a balance transfer card, use eligibility checkers to see which cards you’re most likely to be accepted for before proceeding. Eligibility checkers use a soft search which doesn't impact your score.

2. Keep your older credit accounts open

To keep your credit history as long as possible, it's generally best to keep old, unused accounts open.

However, it's a good idea to check if any of your accounts have an annual fee, as you may decide you still want to close that account. You can also ask your card issuer if you can change to an account without an annual fee.

3. Repay your debt

Work out how much you'll need to pay back each month to get out of debt during the introductory 0% interest period. If you can afford to do so, it’s a good idea to set up automatic payments for this amount so you never miss a due date. This could be a fantastic outcome for both your financial circumstances and your credit score. 

You’ll need to at least pay back the minimum requirement each month to potentially increase your score. 

You should also avoid running up new debt. The big advantage of a balance transfer is that you can use the interest-free period to try and pay off your debt faster. If you spend more and end up in further debt, your credit score could be negatively impacted. 

This blog is for informational purposes only and does not constitute financial advice. Please speak to a qualified financial adviser before making financial decisions.