Credit and Credit Scores: A short lesson

[DonkeyKongSr]

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what about credit consolidation programs? Are they worth it and how do they affect your score?

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bump 'cause I need an answer

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Dom,

I am not really qualified to answer this, but I am pretty sure these programs do hurt your score.

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However, if you have several lines of credit and some have no balance, playing the "lowest interest rate game" isn't a bad idea. If you leave any credit card with zero balance for an extended period of time these days, they will offer you all sorts of balance transfer options, often 0% interest on the balance transfer for 6 months to a year. There may be a charge for this transfer, but often that will be much less than the interest. Once that promo rate ends, look at the balance transfer offers on your other cards, maybe even the one you took it from in the first place, and toss the balance there. Basically, follow the lowest interest rate around making sure that the transfer charges won't exceed the difference in interest.

As long as you aren't cutting it really close to the max on one of those cards, you shouldn't see anything negative happening to your credit because you aren't increasing your overall debt at all and in fact may be lowering it by hundreds or thousands of dollars a year.

Oh yeah, 1 other thing: don't use the available balance on a card with transferred money because any purchases will draw interest until the balance transfer is paid off (i.e. 18% interest on $100 spent after a $2000 balance tranfer at 0% means the $100 keeps accumulating interest until the $2000 is paid off).