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When Changing Credit Cards Will and Won't Hurt Your Credit Scores

By John Rasor

Republish: EasyPublish™
Published: 19Jun2009
Word count: 406
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Every financial expert on line and in the newspapers will tell you not to close credit card accounts. If you do, you'll reduce your available credit and ruin your debt ratios - causing your credit scores to plummet.

You also know that the longer you've held a credit card - or any credit account - the better it is for your credit scores.

But what if you have to close an account because your card has been lost or stolen - or because some business or government entity has had a security breach?

Aside from being a bother, this won't affect you at all.

When an account is closed due to a security breach of any kind, your credit card issuer will simultaneously close your account and open a new one containing all of your history, information, interest rates, and credit limits.

After that the card issuer will report the change to the credit bureaus either as a change in account numbers, or as closing one account and opening an identical account. No hard inquiry will be made, because none of the information will have changed.

Transferring your history is important from your standpoint, because the longer you've held an account, the better effect it has on your credit scores.

Here's a change to consider carefully: Upgrading a current card.

Think twice about this, because requesting an upgrade to a current card could negatively affect your score.

First, it will trigger a hard inquiry. Then, if you're approved, the card issuer will close your current account and open an entirely new one - thereby erasing your years of payment history with that card issuer.

If your upgraded credit line is large enough, that could counteract the hard inquiry and the loss of card ownership history.

But for this reason, it may be wise to investigate other credit cards and choose one from a different issuer. Remember, however, a turned down application shows as a hard inquiry on your report - without the offsetting benefit of more credit. So before asking for a credit card upgrade or making application for a new card, check your own credit scores to make sure you'll qualify.

When the upgrade is credit card issuer generated and offered a "gift" to you, it is the result of their own soft inquiry, and won't affect your scores. Bottom line is always have plenty of credit left and dont max out your credit cards.

http://www.creditscorecowboy.com is the #1 source on the planet for a free credit report, identity theft software and a blog with a wealth of information writtten by lending professionals that know about credit and what determines ones creditworthiness.

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