Will a credit card upgrade hurt my credit rating?
With so many credit cards on the market today, there’s a good chance you’ve seen an offer to upgrade your current card to a premium version. Or maybe you’ve thought about downgrading your card to a no annual fee card.
But a question that makes many cardholders reflect: Will a credit card upgrade hurt my credit score?
If the change means a brand new account, will they lose the positive credit history they’ve built up on the card – years of on-time payments – while still suffering from the credit score that can accompany a new account?
The good news is that upgrading, downgrading, or changing your credit card shouldn’t have a lasting effect on your installment loans credit score. If there is a new account, it will basically inherit the history of the old one. In some cases, there won’t even be a new account. The bad news: During the transition, your score might drop temporarily.
Three reasons why your credit card may change
We will talk about three situations in which the card in your wallet could change:
When you ask the issuer to exchange your existing card for another. You may want to upgrade to a card with no annual fee or with a higher rewards rate.
When the card changes payment network. It is usually a card changing 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 main reasons for this:
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 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.
Readers also ask:
What happens when I request the upgrade or downgrade?
What happens when the issuer changes my card?
What happens when my Visa becomes a Mastercard?
Nerdy tip: If your credit card information is compromised, for example during a data breach, and your issuer sends you a new card with a new number, your credit score should not be affected at all. The new card is linked to the same account, and that is the account that is reported to the credit bureaus.
The bottom line
Don’t worry, upgrading your credit card won’t hurt your credit score. Lenders like to see long-term accounts in good standing, so it’s best to avoid opening new accounts or closing old ones willy-nilly. But replacing your card, switching to another credit card by the issuer, or even getting a new account number probably won’t lower your score. Who knows? You might even get better benefits as a result of the change.