Having multiple credit cards can indirectly impact your credit scores by lowering your debt to credit ratio—also known as your credit utilization rate. Your credit utilization rate is the amount of credit you use compared to the total credit available to you.
Having a lot of credit cards can hurt your credit score under any of the following conditions: You are unable to keep up with your current debt. Your outstanding debt is more than 30% of your total available credit. You added too many cards in too short a time.
Being a multiple credit card holder is good as long as you keep track of payments due, avoid overspending and maintain a low credit utilization ratio.
Credit bureaus suggest that five or more accounts — which can be a mix of cards and loans — is a reasonable number to build toward over time. Having very few accounts can make it hard for scoring models to render a score for you.
It is better to keep unused credit cards open than to cancel them because even unused credit cards with a $0 balance will still report positive information to the credit bureaus each month. It is especially worthwhile to keep an unused credit card open when the account does not have an annual fee.
If your goal is to get or maintain a good credit score, two to three credit card accounts, in addition to other types of credit, are generally recommended. This combination may help you improve your credit mix. Lenders and creditors like to see a wide variety of credit types on your credit report.
Technically, there's no limit to how many credit cards you can have. If you want to break the Guinness world record for the biggest assortment of valid cards, you'll need to collect a whopping 1,498. But the perfect number of cards for you will depend on your personal financial needs.
While the number of cards that you carry likely won't affect your score in itself, you should avoid applying for several new credit cards at one time. Over time, if managed properly, more cards—and thus a higher credit limit—can help you improve credit scores.
There is no universal number of credit cards that is “too many.” Your credit score won't tank once you hit a certain number. In reality, the point of “too many” credit cards is when you're losing money on annual fees or having trouble keeping up with bills — and that varies from person to person.
Although the number of credit cards you have has little to no influence on your credit score, they can affect your credit in other ways. One of the reasons I earned an exceptional credit score in my 20s is because I learned which actions matter as far as credit scores are concerned.
Multiple credit cards help you afford your everyday purchases but also your emergency expenses. You can rely on credit when you run into an unexpected expense, but with two cards you can prevent that large expense from hurting your credit score.
Don't carry every credit card you own because if your wallet is lost or stolen, a thief will have a field day with your cards and you won't have anything to fall back on while you take care of getting new cards. Carry only one or two of your main cards, and possibly a back up.
If your credit score lands between 300 and 579, it is considered poor, therefore lenders may see you as a risk. Here's how the FICO credit scoring system ranks credit scores: Poor: 300-579. Fair: 580-669. Good: 670-739.
Keeping your credit utilization below 30% protects your credit score. But if you want to boost your score as much as you can, keep your ratio under 10%. FICO scores range from 300 to 850, and my score usually fluctuates between 820 and 830.
Depending on your situation, it may be wise to open credit card accounts slowly over several years. Opening multiple card accounts in a short period of time can actually hurt your credit score and can also jeopardize larger financial goals like getting a low mortgage rate when buying a house.
Individuals with a classic FICO score above 795 use an average 7% of their available credit. As your revolving debt climbs, your credit score will begin dropping — long before it reaches the recommended utilization limit of 30% of your available credit.
The average adult has around 5 credit cards, including store credit cards, but there's no golden rule for how many credit cards you should have - or how many credit cards is too many. It depends on personal preference as well as your credit standing and organizational skills.
Credit experts advise against closing credit cards, even when you're not using them, for good reason. “Canceling a credit card has the potential to reduce your score, not increase it,” says Beverly Harzog, credit card expert and consumer finance analyst for U.S. News & World Report.
Whenever you do decide it's time to open a new card account, it's a good idea to wait at least 90 days between new credit card applications—and it's even better if you can wait a full six months.
Although ranges vary depending on the credit scoring model, generally credit scores from 580 to 669 are considered fair; 670 to 739 are considered good; 740 to 799 are considered very good; and 800 and up are considered excellent.
If you don't use a particular credit card, you won't see an impact on your credit score as long as the card stays open. But the consequences to inactive credit card accounts could have an unwanted effect if the bank decides to close your card.
Flipping is primarily done to reap multiple rewards at once, utilizing as many credit cards as you can easily manage, and then eventually closing the cards to repeat the process again.
Walter Cavanagh of Santa Clara, Calif. has earned the Guinness World Record title of "Mr. Plastic Fantastic" by keeping 1,497 credit cards in his name, amounting to a $1.7 million line of credit. Of course, Cavanagh doesn't keep all of those credit cards handy at any given time.