Introduction

At O1ne Mortgage, we prioritize your financial well-being and aim to provide you with the best advice to make informed decisions. One common question we encounter is whether it’s better to upgrade your existing credit card or apply for a new one. This article will explore the pros and cons of each option and help you decide what’s best for your financial situation.

Does a Credit Card Upgrade Hurt My Credit Score?

Upgrading your credit card generally does not hurt your credit score. When you upgrade, your current card is replaced with a new one from the same issuer, a process known as a product change. The account history from your existing card transfers to the new card, maintaining the same credit card number, account number, and credit limit. Since product changes usually do not require a hard credit inquiry, upgrading your card is unlikely to affect your credit score.

Pros and Cons of Upgrading Your Credit Card

Pros

• Rewards Potential: If your current card doesn’t offer rewards, upgrading to one that does can be beneficial. You might also find a rewards structure that better aligns with your spending habits.
• Credit Inquiry: Most product changes do not require a hard credit pull, which means your credit score remains unaffected.
• Age of Credit History: Upgrading your card does not create a new account, so the age of your credit history remains intact, which is beneficial for your credit score.

Cons

• Bonus Availability: Some rewards cards offer welcome bonuses for new cardholders. If you upgrade, you may not qualify for these bonuses.
• Annual Fee: Upgrading to a premium card may come with an annual fee, which could offset the rewards you earn.
• Introductory Offers: Some cards offer special low or 0% APR financing that you may not be eligible for when you upgrade.

When to Apply for a New Credit Card

While upgrading your current card has its perks, applying for a new card might be a better option in some cases. For instance, if you want to take advantage of introductory financing or bonus offers, or if you find a product from a different issuer that better fits your needs, applying for a new card could be beneficial.

Considerations

• Hard Credit Inquiry: Applying for a new card will generate a hard credit inquiry, which can cause a slight, temporary dip in your credit score.
• Age of Accounts: Opening a new account will lower the average age of your credit accounts, which can affect your credit score.
• Credit Utilization Ratio: Adding a new card can increase your available credit and reduce your credit utilization ratio, which can positively impact your credit score as long as you don’t increase your spending.

The Bottom Line

Whether upgrading your existing card or applying for a new one is best for you depends on your individual situation. Contact your credit card issuer to learn about your eligibility for an upgrade. If you decide that applying for a new card is the best option, check your credit report and score to ensure the information is accurate and determine your likelihood of approval.

For any mortgage service needs, call O1ne Mortgage at 213-732-3074. Our team of experts is here to help you navigate your financial journey with confidence.