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Is Costco’s switch from American Express to Citi Visa Credit Cards going to Impact your Credit Score?

2000px-credit-score-chart-svgLike many of you, we are long-time Costco loving members who have used our Costco American Express credit card extensively to earn rewards. Effective today, Costco has switched to a Citi Visa credit card that they believe is better in the long run for their members. But will this switch have an impact on your credit score?

One of our favorite credit experts, Ken Strey of Scorewell Inc., has recently weighed in on the subject and offers these words:

“Usually, applying for a new line of credit can result in a “hard pull” on your credit report. But in this case, since no new credit is being issued, Citi says it will not pull a credit report as part of the account transfer process.

Where cardholders might be affected is in their credit score – depending on how much, and what sorts of, available credit they currently have, and how long they have had the AmEx Costco card.”

The number of times your credit score is pulled can impact your score. It stands to reason that pulls occur when you are attempting to obtain more credit, thus the negative impact on your credit score. So it is nice that Citi isn’t pulling credit again as part of their process. Ken goes on to say:

“While this transition from AmEx to Visa is structured in a way that you get a new card without pulling a credit report, the change will almost certainly reflect that your AmEx was closed and a new Citi/Visa account was opened.

If you’ve had that AmEx account for a long time and always paid on time, your credit score might be dinged because your “length of credit history” would be shortened.”

Having had extensive experience with our client’s credit scores as part of the home buying and refinancing processes, we know that it is impossible to predict exactly what will happen with Costco member’s credit scores as a result of the credit card change until there is some history to compare, but it is something you should be aware of in case you are in the process of obtaining new credit. If we find out any definitive impact of the new card’s impact on credit scores we’ll share that information.

Ken Strey can be contacted at 925-478-4732, kenstrey@scorewellinc.com.

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