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Should You Upgrade Your Credit Card or Apply for a New One?

At O1ne Mortgage, we prioritize your financial education and well-being. If you’re considering whether to upgrade your credit card or apply for a new one, this guide will help you make an informed decision. For personalized mortgage services, call us at 213-732-3074.

Does a Credit Card Upgrade Hurt My Credit Score?

Upgrading your credit card typically does not hurt your credit score. This process, known as a product change, involves replacing your current card with a new one from the same issuer. Your account history, credit card number, and credit limit usually remain the same. Since product changes do not require a hard credit inquiry, your credit score is unlikely to be affected.

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 suits 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: Upgrading may disqualify you from welcome bonuses that new cardholders receive.

Annual Fee: Premium cards often come with annual fees that can offset the rewards you earn.

Introductory Offers: You may miss out on special low or 0% APR financing offers available to new cardholders.

When to Apply for a New Credit Card

While upgrading has its perks, applying for a new card might be a better option if you want to take advantage of introductory financing or bonus offers. Here are some considerations:

Hard Credit Inquiry: Applying for a new card will generate a hard credit inquiry, which can temporarily lower your credit score. If you’re planning to apply for a large loan, consider waiting until after the loan is issued.

Age of Accounts: Opening a new account will lower the average age of your credit accounts, which can impact 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 you should upgrade your existing card or apply for a new one depends on your individual situation. Contact your credit card issuer to learn about your eligibility for an upgrade. If you decide to apply for a new card, check your credit report and score to ensure your credit history is accurate.

For any mortgage service needs, reach out to O1ne Mortgage at 213-732-3074. We’re here to help you make the best financial decisions.

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