Whether youve asked for a switch or the card moves to a new issuer, long-term credit score damage isnt likely.
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With so many credit cards on the market today, theres a good chance youve seen an offer to upgrade your current card to a premium version. Or maybe youve thought about downgrading your card to one with no annual fee.
But one question that gives many cardholders pause: will a credit card upgrade hurt my credit score?
If the switch means a brand new account, will they lose the positive credit history theyve built up on the card — the years of on-time payments — while suffering the credit-score hit that can accompany a new account?
The good news is that upgrading, downgrading or changing your credit card shouldnt have a lasting effect on your credit score. If theres a new account, it will essentially inherit the history of the old one. In some cases, there wont even be a new account. The bad news: During the transition, your score could dip temporarily.
Having a good credit score is essential for getting approved for loans and credit cards with the best terms, That’s why many people worry that switching credit cards could hurt their credit
After looking at several reliable sources here’s what I’ve learned about how switching credit cards affects your credit score
How Credit Scores Work
First, let’s review the key factors that determine your credit score:
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Payment history (35%) Whether you pay your bills on time This is the most important factor
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Credit utilization (30%): The ratio of credit you’re using compared to your total available credit limits. Experts recommend keeping this below 30%.
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Length of credit history (15%): How long you’ve had credit accounts open. Older accounts help your score.
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New credit (10%): Opening new accounts can lower your average account age and ding your score temporarily.
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Credit mix (10%): Having different types of credit (credit cards, installment loans, etc.). More variety helps your score.
As you can see, the length of your credit history and new accounts opened are directly related to switching credit cards. Let’s explore this more.
Does Canceling a Credit Card Hurt Your Score?
If you cancel an old credit card, it can definitely hurt your credit utilization and length of credit history, dropping your score. Here’s how:
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Your credit utilization ratio will go up since you’ll have less total credit available.
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Your average age of accounts will decrease since you’re removing an old account from your history.
However, as long as you have other old accounts still open, the impact shouldn’t be too severe. Just make sure you don’t cancel your oldest card.
Does Opening a New Card Hurt Your Score?
When you apply for a new credit card, several things happen:
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The issuer does a hard credit check when you apply, which causes a small, temporary drop in your score.
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You have a new account on your credit report, which lowers your average age of accounts.
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Your total available credit increases, helping lower your utilization ratio.
Overall, a new card causes a short-term dip in your score, but your score typically recovers within a few months. The impact is fairly minor if you already have a long credit history.
Does Upgrading a Card Hurt Your Score?
The good news is requesting an upgrade or downgrade with your current issuer generally won’t require a hard credit check or open a new account.
You’ll keep the same account number and history, so your length of history, utilization, and other factors are unaffected. Your score typically isn’t impacted at all with an upgrade.
Does Switching Issuers Hurt Your Score?
If your credit card gets moved to a new issuer – like when Costco switched from Amex to Citi – it can cause complications. Here’s what happens:
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Your old account will show as closed on your credit reports.
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The new account may not show up right away, temporarily decreasing your total available credit and length of history.
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Once reported properly, the new account will inherit the same open date as your old account.
This issuer switch causes a short-term dip in your credit scores that typically rebounds in a couple months. The history isn’t lost forever.
Strategies to Minimize Score Damage
If you do need to cancel or open credit cards, here are some tips to reduce the credit score impact:
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Downgrade old cards instead of closing them to keep the history.
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Consolidate credit limits before closing cards to minimize the utilization hit.
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Space out new applications by at least 6 months to limit hard inquiries.
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Ask issuers to upgrade you to a different card instead of applying for a new account.
The Bottom Line
Switching credit cards doesn’t need to hurt your credit score if done strategically. Try to keep old accounts open, be judicious with new applications, and request upgrades instead of opening new cards.
With a little caution, you can switch cards to earn better rewards and still maintain excellent credit!
Three reasons your credit card could change
Well talk about three situations in which the card in your wallet could change:
- When you ask the issuer to swap out your existing card for a different one. Perhaps you want to switch to a card with no annual fee or a higher rewards rate.
- When the card moves from one issuer to another. This happens from time to time, especially with branded credit cards. Examples include the Costco card switching from American Express to a Citi-issued Visa in 2016, Fidelity making a similar move the same year, and Walmart moving its card from Synchrony to Capital One in 2019.
- When the card switches payment networks. Usually this involves a card moving from Visa to Mastercard or vice versa, as was the case with multiple Capital One cards in 2020.
How new accounts affect your score
All other things being equal, an older credit card account is better for your credit score than a newer one. There are two key reasons for that:
- About 15% of your FICO credit score is determined by the length of your credit history and the age of your accounts. The older the account, the longer the history, the higher the average age of your open accounts, and the better for your scores.
- A new account that results from a new credit application will usually trigger a “hard” credit check, which can lower your score by several points in the short term.
Does Opening a New Credit Card Hurt Your Credit Score?
FAQ
Does switching credit cards hurt your credit score?
When you apply for a new credit card, the issuer performs a hard inquiry into your credit history. A hard inquiry can temporarily decrease your credit scores.
What is the 2/3/4 rule for credit cards?
How many points will my credit score decrease with a new credit card?
When a card issuer looks at your credit information because you’ve applied for a credit card, it is a so-called hard pull. That can lead to a slight drop in your credit score, whether you are approved or not. A new inquiry typically takes less than five points off your FICO scores, according to FICO.
How can I raise my credit score 100 points in 30 days?