Impact of Changing Cards: Will It Boost or Damage My Strong 800 Credit Score?

A Reddit user is curious about the impact of getting a better credit card on his credit score.

He has used his current credit card for a long period of time, and since he doesn’t carry a balance, he’s never really focused on making sure he has a “good” credit card. If he gets a new card, he’s still planning on using it for everyday purchases and still planning to pay it off in full, and he’s not really open to a card with an annual fee. 

Since the Redditor now has a credit score well into the 800s, he’s thinking about getting a new card now to try to boost that score even further, and he’s wondering if that’s worth looking into. 

Will getting a better credit card help your credit?

First and foremost, let’s look at what a “better” credit card could do for the original poster’s (OP’s) credit. Your credit score is based on:

• Payment history
• Credit Utilization Ratio
• Credit age
• Mix of different kinds of credit
• Inquiries (requests for new credit)

If the OP is going to keep paying his bill on time, his payment history won’t be impacted by getting a new card since he’s already been paying on time and will continue to do so.

His credit utilization ratio will be affected, though, because he’ll have more credit available to him as long as he doesn’t close the old account (which he shouldn’t). If he currently has a credit card with a $5,000 limit and he gets a new card with a $5,000 limit, he now has a $10,000 total line of credit. Since he has more available credit, this helps improve his utilization ratio. 

His credit age is unfortunately going to take a hit when he opens a new account, though, and he will also get an inquiry on his credit report. That shouldn’t be a big problem, because inquiries only become an issue if you have too many on your credit record. And, any damage done from shortening his average account age should be pretty minor and will go away quickly over time as he uses his new card responsibly. 

As for the mix of different kinds of credit, a “better” card isn’t going to help that, because he’s still just getting another credit card. This component of your score improves when you show you can be responsible with different kinds of debt, such as credit cards and installment loans like personal or auto loans. 

Is it worth getting a new card anyway?

While getting a new credit card isn’t going to help the Redditor’s credit score, it may still be worth doing because of the other benefits the right credit card can offer. A credit card with a generous rewards program that is well-matched to the poster’s spending could help him to potentially earn tens of thousands of dollars per year in rewards for spending that the poster was going to do anyway. 

A good card can also offer great purchase protections like extended warranties, protection if merchants don’t accept returns, and the ability to reverse charges in the event that a merchant turns out to be fraudulent.  There is no reason for someone with a credit score above 800 to be using a card that’s only ok when he could easily qualify for a cash back card with no annual fee that’s great. 

The Redditor should explore his options for cash back cards today, apply for one that offers generous rewards for everyday spending or bonus rewards in a category he often shops in, and should start using it as much as possible and stacking up rewards so that he gets paid back for purchases he was planning to make anyway. 

The post Impact of Changing Cards: Will It Boost or Damage My Strong 800 Credit Score? appeared first on 24/7 Wall St..