Does Upgrading Your Credit Card Hurt Your Credit Score?

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There are plenty of reasons to upgrade your credit card, and not all of them have to do with getting more perks. For example, if you’ve had the same credit card since college, but you’ve graduated now and no longer want a student credit card, that’s a reason to upgrade your card.

Or maybe you only had fair credit when you applied for your current credit card, but you’ve since improved your score enough to unlock premium credit cards with top perks. That’s another reason to look at other top credit card offers that will reward your good credit with generous bonus offers, elevated reward-earning rates and benefits like airport lounge access and annual travel credits.

Upgrading your card shouldn’t affect your credit score

Upgrading your card typically requires a “product change,” through which the card issuer moves your existing credit line to a different card product. This rarely ever results in a hard inquiry on your credit reports, nor does it impact your credit utilization ratio since it doesn’t add or subtract any debt. As a result, upgrading your credit card to a better card typically will not have any effect on your credit score.

Also note that the same rule also applies if you downgrade your credit card, or request a switch to another card from the same issuer for any reason. For instance, if you have a credit card with an annual fee, and you’re tired of paying it, you may be able to change to a no annual fee card from the same issuer with no impact on your credit score.

You’ll miss out on a credit card sign-up bonus

The biggest issue with upgrading your credit card versus signing up for a new card is that you’ll miss out on earning a credit card sign-up bonus. To earn a credit card sign-up bonus, you must apply for a new account and meet the minimum spending requirements as a new card customer. This is true for any credit card product change you request, whether it’s an upgrade or a downgrade.

For instance, if you’ve had the Chase Sapphire Preferred® Card for five years and you decide to ask Chase if you can upgrade to the Chase Sapphire Reserve® to get airport lounge access, you won’t be eligible for the new cardmember bonus.

On the other hand, if you applied for the Chase Sapphire Reserve separately and met all the requirements to be approved and earn the bonus: Earn 60,000 bonus points after you spend $5,000 on purchases in the first 3 months from account opening..

Keep application restrictions in mind

For example, most people know that Chase’s 5/24 rule means you won’t be approved for one of the issuer’s cards if you’ve opened five or more new credit cards from any issuer in the last 24 months.

Chase also has “card family” rules. One such rule is that you can only be the primary account holder on one Sapphire card at a time — either the Preferred or the Reserve. It means that in our previous example, if you want to get the Chase Sapphire Reserve as a Preferred cardholder, you’d need to close your Preferred account before you’d be eligible to earn the bonus on the Chase Sapphire Reserve.

However, the application for the Chase Sapphire Reserve also states that the welcome bonus on this card is not available to “current cardmembers of any Sapphire credit card or previous cardmembers of any Sapphire credit card who received a new cardmember bonus within the last 48 months.” If you held the Preferred card for less than four years, you still may not be eligible for the Reserve’s welcome bonus — even if you close the account before applying.

American Express, for its part, has a “once per lifetime” rule that says you can only earn the welcome bonus on its cards once per lifetime. (Though some sources say this rule resets every seven to eight years, that number has not been officially confirmed). With Amex cards, upgrading to a card you’ve never had also means you’d be ineligible to earn the welcome bonus on that card in the future.

As an example, consider that the fine print on the Platinum Card® from American Express reads: “You may not be eligible to receive a welcome offer if you have or have had this Card, the Platinum Card from American Express Exclusively for Charles Schwab, the Platinum Card from American Express Exclusively for Morgan Stanley or previous versions of these Cards.”

When to apply for a new card instead

As long as you follow application restrictions, you’re almost always better off applying for a new credit card instead of upgrading an existing line of credit with a product change to a new card.

The reason for this is twofold:

• You get the chance to earn a generous welcome bonus as long as you qualify.
• Applying for a new credit card can lead to having more open credit available to you.

The latter can lower your credit utilization ratio, which is an important factor that makes up roughly 30% of your FICO Score.

There are a few short-lived downsides that can come into play if you apply for a new card:

• A hard inquiry on your credit report can have a slight negative impact on your credit score for a few months.
• The length of your credit history shortens with each new account and this factor makes up 15% of FICO Score.

The bottom line

You can upgrade your credit card if you’d like, but there may also be compelling reasons to apply for a new card instead. The choice is yours — by knowing the pros and cons of each approach, you’ll be better prepared to make an informed decision to find the best credit card for your spending habits.