Does Upgrading My Credit Card Affect My Credit Score?

Find out if upgrading your credit card does affect your credit score or not!

Whether you’ve recently improved your credit score or are seeking better rewards, the idea of upgrading your credit card is appealing. However, many people hesitate, wondering: "does upgrading credit card affect credit score?"

Upgrading a credit card allows you to enjoy enhanced benefits. So, let's explore everything you need to know about it to help you make informed decisions that align with your financial strategy and goals.

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What Does Upgrading A Credit Card Mean?

Upgrading a credit card involves transitioning from your current card to one with enhanced features or benefits. For instance, you might move from a basic low cashback percentage card to a premium rewards card with higher earning potential and travel benefits. Unlike applying for a new card, an upgrade is typically offered by your existing issuer and doesn’t require a hard credit inquiry.

Does Upgrading A Credit Card Hurt My Credit Score?

The good news is that upgrading your credit card typically doesn’t harm your credit score. When you upgrade, your account and issuer remains the same, meaning your account history - such as on-time payments and credit utilization - usually carries over to the upgraded card. These are key factors in determining your credit score. However, if the upgrade requires opening a completely new account with a different number, it might result in a hard inquiry on your credit report, which could temporarily lower your score. Additionally, if your old account is closed during the process, you might lose the benefit of its account age, potentially also causing a dip in your score.

Pros And Cons Of Upgrading Your Credit Card

Pros:

• Improved Rewards and Features: upgrading can give you access to a card that better matches your spending habits, offering perks and rewards you’re more likely to use.
• Minimal Impact on Credit Score: unlike applying for a new card, upgrading usually doesn’t require submitting an application or undergoing a hard inquiry.
• Account History: since the same account is maintained, you don’t lose the positive impact of your account’s age or payment history.

Cons:

• Loss of Sign-Up Bonuses: upgrading may mean forgoing the introductory offers or welcome bonuses that new cardholders receive.
• Higher Fees: it could come with increased annual fees that may outweigh the added benefits if not fully utilized.
• Limited Customization: you’re limited to the options offered by your issuer, which may not fully align with your financial goals.

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When To Upgrade vs. Downgrade a Credit Card

Upgrade:

• Your current card lacks rewards, and you’d like to start earning them for your purchases.
• You’re ready to transition from a secured credit card to an unsecured one.
• Another card provides perks and benefits that better suit your lifestyle and preferences.

Downgrade:

• You’re not using the benefits of your current card.
• The annual fee is too high compared to the rewards you earn.
• Your financial situation has changed, and you’re looking to reduce expenses.

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Upgrading vs. Increasing Your Credit Limit: What’s the Difference?

While upgrading a card can offer better features, increasing your credit limit simply boosts the maximum amount you can borrow. Both options can be helpful, but they serve different purposes:

• Impact on Credit Utilization: a higher credit limit can lower your credit utilization ratio, positively influencing your credit score.
• Access to New Benefits: upgrading offers additional perks, which an increased credit limit alone won’t provide.
• Fees and Costs: increasing your credit limit usually doesn’t come with additional fees, whereas upgraded cards often have higher annual fees.

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