A Reddit user posted recently, indicating they were thinking about switching credit cards. They want a “better” card because they have been using the same one for a long time since they started building credit. However, they were not sure if doing so would help or hurt their 800 credit score, which is a great score they have worked hard to get.
So, should the user switch, or will doing so damage their hard-earned credit score?
Will switching credit cards damage your credit?
The good news for the Reddit poster is that switching to a new credit card should not do much, if any, damage to their score — as long as they do it right.
Your credit score is based on five primary factors:
- Payment history
- Credit utilization (credit used versus credit available, which should ideally be below 30%)
- Types of credit that you have (a mix of different kinds of debt is better)
- Age of your credit account
- Number of inquiries (inquiries go on your credit report when you request new credit, and a lower number of inquiries is better)
In the case of this Reddit user, opening a new card will result in an inquiry and will lower his average age of credit. This could result in a slight short-term decline — but most likely not a big one, if he doesn’t have many other inquiries on his record and if he keeps his existing card open.
In fact, keeping the existing card open is going to be the key to getting a new card without hurting his score. If he avoids closing the old card, he maintains the old account to help his average age of credit, he keeps his positive payment history on his record, and he adds to his credit line so his credit utilization ratio should improve — as long as he doesn’t max out his new card, which it seems pretty clear he won’t.
There’s no downside to keeping the old account open since the card doesn’t have an annual fee, but the Redditor will need to make sure it doesn’t get closed for inactivity if he starts using his new card all the time. He can make one small purchase on the old card every few months and pay it off right away, or set up a recurring charge for something, like a streaming service, and then set up autopay –although he should still check the account around once a month to make sure there’s been no fraudulent charges and that the autopay is working.
As long as he makes the card change this way, and he doesn’t apply for tons of new credit at once, any negative impact on his credit will be very short-term, and he will be able to start benefiting from the better card he signs up for.
Don’t be afraid to find the right credit card for you
Many people are like this Reddit user and end up getting a card and sticking with it for a long time, just because it is easier to do that or because they are worried about hurting their credit.
However, you can miss out on valuable rewards and perks by sticking with the status quo. There are so many great credit cards out there that could earn you cash back and rewards on everyday purchases, you are leaving free money on the table if you don’t find one that’s a good fit.
If you have good credit and can use your cards responsibly, there is no reason not to shop around, see what’s out there, and get a new card when the time is right.
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