I do not see how carrying a balance on a zero APR credit card will have any more or less impact on person's credit score than a card that charges interest. Before discussing your question in greater depth, let us look at credit score calculations in general.
Your credit rating is calculated based on several variables, including:
- Payment history: 35%
- The most heavily weighted factor used in calculating a credit score. Consistently paying bills on time has a positive influence on a score, while late or missed payments will hurt in this area. If you have delinquent payments, the older the delinquency the less the negative impact on your score will be. Collection accounts and bankruptcy filings are also taken into consideration when analyzing your payment history.
- Total debt and total available credit: 30%
- If all accounts are maxed out, the debtor will be considered a poor credit risk, because it appears he or she struggles to pay off the debt incurred. If account balances are relatively low compared to available credit, this part of the risk analysis should help the overall credit score. The score calculation also looks at these two factors independently. Having too much available credit, whether you have used it or not, could hurt your credit score, as statistical studies show that people with excessive amounts of available credit are a higher credit risk. Unfortunately, the credit score producers do not define what they consider excessive, so the best tip is to use credit conservatively and to keep your debt to credit limit ratio low.
- Length of positive credit history: 15%
- The longer you maintain accounts in good standing, the better a score will be. This shows the ability to make a long-term commitment to a creditor and are responsible about making payments consistently.
- Mix of types of credit: 10%
- Having several different types of credit, such a credit cards, consumer loans, and secured debt, will have a positive influence on your credit score. Having too much of one type of credit can have a negative impact.
- Number of new credit applications you completed recently: 10%
- Applying for too much new credit in a short time period makes indicates the debtor could be credit risk, as the debtor may be desperately trying to keep his or her head above water. The models make an exception for people who are shopping for a loan, so if you are simply applying to see where to find best rate on a new loan, you need not worry too much about damaging your credit score.
As you mentioned, total debt in comparison to the total credit available impacts your overall score. You did not mention how much the available credit you intend to use on the zero APR credit card account, so that is a significant factor in answering your question.
You mentioned using more than 30% of your available credit can damage your credit score. There is controversy surrounding the threshold where overall and individual available credit utilization crosses the line from being a positive to neutral to negative. Officials at Fair Isaac & Co., the creator of the FICO score, have offered contradictory statements on where those thresholds lie. As a result, the best advice anyone can offer is, "Lower is better."
Pay attention to the fine print in the zero APR credit card offer. Zero APR may be in effect only if you continue to make payments, and if you miss a payment the account may revert to an astronomical level.
To learn more about credit scores, reports, and card offers, see the Bills.com Credit Help Information & Resources page
I hope this information helps you Find. Learn & Save.