Does upgrading your credit card hurt your credit score?
Quick insights
- Upgrading your credit card to a new product from the same issuer typically doesn't involve a hard credit inquiry and likely won’t affect your credit score.
- Many credit card issuers don’t perform a credit check during an upgrade because they already have the cardmember’s credit information on file.
- Upgrading a credit card usually preserves the account history, which could potentially have a positive impact on the cardmember’s credit score.
Upgrading your credit card can be a strategic move to help improve your rewards earnings or increase your credit limit. It may be an appealing option for cardmembers who have a positive payment history on their current credit card and want to leverage their loyalty to a credit card issuer.
However, you may have concerns about whether upgrading your card will involve a hard inquiry—a credit check performed when you apply for new credit—on your credit, potentially having a negative impact on your credit score.
Let's explore how credit card upgrades might impact credit scores and discuss the potential pros and cons of upgrading versus applying for a new credit card.
Does upgrading your credit card affect your credit score?
Generally, upgrading your credit card to a new product offered by the same issuer is considered a "product change." This process typically doesn't involve a hard credit inquiry, as the issuer already has your credit information on file. As a result, upgrading your credit card usually won't negatively impact your credit score.
When you upgrade, you're essentially modifying your existing account to potentially get additional rewards-earning opportunities, higher credit limits and other benefits.
Because the account remains intact, your credit age and history associated with that account are often preserved. As a longer credit history is generally viewed favorably by credit scoring models, this could be beneficial for your credit score.
Does upgrading my credit card result in a hard credit inquiry?
Many issuers don't perform a hard credit inquiry when you're upgrading an existing account, as they already have access to your credit information. However, it may be helpful to confirm with your issuer whether a hard inquiry will be performed. If a hard inquiry is conducted by a financial institution, it may cause a slight, temporary decrease in your credit score. Nevertheless, this impact is generally minimal and short-lived.
Some issuers might still perform a soft inquiry or review your credit report to ensure you're eligible for the new product. Soft inquiries may occur when your credit is checked for non-lending purposes (e.g. background checks, preapproved offers, etc.) and typically do not affect your credit score.
Pros and cons of upgrading a credit card
Upgrading your credit card may have both positive and negative effects on your credit score. Here are some potential pros and cons:
Pros
- No new hard inquiry: Upgrading typically doesn't trigger a hard credit inquiry, which means your credit score should not be affected by a new inquiry.
- Preserves credit history: Because you're upgrading an existing account, your credit history with that account remains intact, which can be beneficial for your credit score.
- Improves credit utilization ratio: if the upgrade increases your credit limit and your spending remains the same, it could lower your credit utilization ratio (total credit card balances divided by total credit limits), which may positively impact your credit score.
Cons
- Potential for a hard inquiry: Although rare, some issuers might still perform a hard inquiry when you upgrade, which could cause a slight, temporary decrease in your credit score.
- Changes to account terms: If the credit card upgrade requires opening a new account—an uncommon event—the original account will be closed, shortening your credit history and reducing your score.
- Risk of losing promotional rates: If your account upgrade causes you to lose a low promotional interest rate, it could potentially affect your ability to manage your account balance and payments.
You may be able to minimize the potential negative impact to your credit score by contacting the issuer to clarify whether an upgrade will result in a credit inquiry, the closing of your original account or loss of promotional interest rates.
When to consider applying for a new credit card
While upgrading can be a great option, there are scenarios where applying for a new credit card might be more beneficial:
- Welcome bonus or new cardmember offers: These promotional incentives offer increased rewards when you meet specific spending requirements within a specified timeframe. Since welcome bonus offers are usually only for new cardmembers, you'll often need to apply for a new card and meet any eligibility requirements.
- Favorable terms from another issuer: If a different credit card issuer offers favorable terms (e.g. low promotional interest rate) or more potential to maximize rewards earnings, applying for a new card could be a better choice.
- Add to your portfolio of credit cards: Holding multiple credit cards can help you maximize rewards. For instance, if you already have a card for everyday expenses, applying for a travel rewards credit card—rather than upgrading—potentially allows you to earn more points if you use each card strategically for different types of purchases.
How applying for a new credit card can impact your credit score
It’s generally more likely that a hard inquiry will be conducted when you apply for a new credit card. A temporary decrease in your credit score may occur, so it could be beneficial to space out credit card applications to avoid multiple hard inquiries within a short period.
Opening a new credit card account could have a positive impact on your credit score by increasing your credit utilization ratio. However, if opening an additional credit card account tempts you to overspend, it could cause you to carry a large balance on the card, which could potentially increase your credit utilization ratio.
Limiting your purchases to those you can afford and always paying your balance in full can help keep your credit utilization low.
In summary
Upgrading your credit card usually won’t hurt your credit score, as it often preserves your account history and, in many cases, doesn’t result in a hard inquiry. However, you may want to consider checking with the credit card issuer to confirm the process.
If you’re seeking a welcome bonus offer or improved rewards-earning potential from a credit card offered by another issuer, applying for a new card could be worthwhile. If used wisely, the new card might improve your credit utilization ratio, but keep in mind that a hard credit inquiry will likely occur during the application process.
By understanding the pros and cons of upgrading versus applying for a new credit card, you can make an informed decision.
