Can Having Too Many Credit Cards Hurt Your Credit Score?

Bank cards are a fantastic comfort, however can you will have too a lot of them? Standard monetary knowledge says an extra of plastic beneath your identify will harm your credit score rating. However simply precisely, what number of bank cards are “too many”?

How Credit score Playing cards Have an effect on Your Credit score Rating

Your credit score rating is calculated primarily based on numerous elements:

• Cost historical past. That is the most important single issue, accounting for 35% of your credit score rating. Though it takes your whole month-to-month debt funds into consideration, your bank card funds are key. Bank card corporations are the least forgiving when funds are late and fast to report back to credit score bureaus when that occurs.
• Debt-to-credit ratio. Additionally known as credit score utilization, this ratio measures your excellent debt in relation to your accessible credit score—principally, how shut you’re to the credit score limits on your whole playing cards and features of credit score. Your credit score utilization counts for 30% of your credit score rating, and a ratio increased than 30% will harm your rating.
• Size of credit score historical past. The longer you’ve got had a selected credit score account, the higher. Folks with wonderful credit score scores have a median age of 11 years for all of their playing cards. This variable contributes to fifteen% of your general rating.
• New credit score. Everytime you add a brand new credit score account, it could trigger your credit score rating to drop a number of factors—first when the creditor makes an inquiry in your credit score report, then when the account is definitely opened. New credit score impacts 10% of your rating.
• Credit score combine. The kinds of credit score you will have rely for the remaining 10% of your rating. Credit score bureaus wish to see the way you handle debt throughout several types of credit score accounts, reminiscent of bank cards, retail accounts, installment loans, auto loans, or a mortgage.

How Many Playing cards Ought to You Carry?

As you possibly can see from the checklist above, the variety of bank cards you will have and the way you employ them can have a direct impression in your credit score rating.

In the event you’re a novice bank card person, it is sensible to deal with constructing a credit score historical past with one or two playing cards and paying off your steadiness in full every month. Including bank cards for particular functions, reminiscent of a great rewards program or higher travel-related advantages, can even make sense, offered you add them regularly over time relatively than all of sudden. 

In the event you’ve used bank cards for a number of years and typically carry a steadiness, it might make sense so as to add a card if it has a considerably decrease rate of interest. You may additionally need to switch a steadiness to a brand new card that provides a promotional 0% APR for brand spanking new cardholders. Nonetheless, you continue to must deal with retaining your debt-to-credit ratio beneath 30%.

Normally, it is typically good to have a major card that you simply use for many spending and perhaps one or two as a back-ups or for specialised functions (reminiscent of for a selected spending class that’s rewarded with additional bonus factors).



Dealing With Too Many Playing cards

In the event you assume you could have too many playing cards or have some you not use, the worst factor you are able to do is begin closing accounts with out contemplating the impression in your credit score rating. Closing older bank cards can shorten your credit score historical past, which might harm your rating.

Cost historical past on closed accounts ultimately falls off your report, which might additionally harm your rating. Closing bank card accounts additionally reduces your quantity of obtainable credit score, which might harm your credit score utilization ratio you probably have excellent balances.

It is higher to depart your bank card accounts open and simply put these playing cards on ice. In the event you get a warning about inactivity from the cardboard issuer, use that card every now and then to forestall the account from being closed. You can even hold that bank card as a backup, particularly if it comes with the next credit score restrict.

Another choice for an older bank card you not use—and will have gotten if you have been simply beginning out and did not have many selections—is to ask the issuer about buying and selling as much as a greater product, relatively than closing the account outright.

The Backside Line

Having numerous bank cards can harm your credit score rating beneath any of the next situations: 

• You’re unable to maintain up together with your present debt.
• Your excellent debt is greater than 30% of your whole accessible credit score.
• You added too many playing cards in too quick a time.
• You lack range in your credit score accounts (i.e., you do not have different kinds of credit score in your identify like a mortgage, auto mortgage, and so forth.).

However do not merely begin closing accounts simply to cut back the variety of playing cards you will have. That may by no means assist your credit score rating. As an alternative, repay any excellent balances and plan to at the very least maintain on to the oldest card. Retailer it in a secure place aside from your pockets. Then simply use it every year or so to maintain it energetic and examine choices for buying and selling it in for a greater card with that issuer.