SVGs and EPS files are vector-based, so you can scale them without quality loss. Use the Selection Tool (V) to select, then drag the corners while holding Shift.
For raster images (JPG, PNG), always ensure you're not enlarging beyond their original size to maintain clarity.
For Example:
3600x3600 Pixel Image will be Better Compared to using 200x200 Pixel.
Please note that Illustrator is a vector based program, It is always recommended to use PNG and JPEG format in Photoshop for a better editing experience.
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