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* Suggested credit score ranges for credit cards are supplied by QuinStreet, not from the issuers, and are guidelines, not a guarantee of approval.
* Suggested credit score ranges for credit cards are supplied by QuinStreet, not from the issuers, and are guidelines, not a guarantee of approval.
It’s a common misconception that having multiple credit cards hurts your credit. The truth is that it’s how you manage your cards that matters. As a full-time digital nomad and credit cards writer, I currently have 10 active credit card accounts. That’s more than the average person, but far less than some people I know, who have 20, 30, or even 40 active credit card accounts. Luckily, using multiple credit cards responsibly can actually help your credit score. Here’s how.
How Multiple Credit Cards Affect Your Credit Score
Your credit score is a combination of several factors, including your payment history, credit utilization, credit history length, new credit accounts opened, and the overall mix of credit. Having multiple credit cards can help or hurt each of these factors, depending on how you use them.
Payment history
The most important factor when determining your credit score is your payment history. You should never miss a payment, and always make at least the minimum payment on your account to avoid harming your credit score.
Although having multiple credit cards won’t directly impact your payment history, if you have trouble remembering various card due dates and miss a payment, your score will decrease. Be sure to keep track of each statement closing and its corresponding due date so you can maintain a high score.
Credit utilization
If you have five credit cards open, each with a credit limit of $5,000, your overall credit limit is $25,000. If you tend to make $2,000 in purchases every month, your credit utilization ratio is 8%, which is fantastic for your credit score. If you spend the same amount each month with just one credit card open, using the same $5,000 credit limit, your utilization ratio is 40%, which can hurt your credit score.
However, if you have $25,000 worth of credit extended to you and you max out your cards, this will have an extremely negative impact on your credit. It’s important only to charge what you can reasonably afford. Just because you have available credit doesn’t mean you should use it.
Length of credit history
The length of your credit history is a factor when determining your credit score. The longer the average age of your accounts, the better. So, if you opened one credit card at 18 and then four more at 24 and 25, your average age of accounts is relatively low. There’s not much you can do about this, but opening several new cards in a short period of time will lower your length of credit history, so try to space out your applications.
New credit
Every time you submit a credit card application, you receive a hard inquiry on your credit report. Each hard inquiry results in a temporary decrease in your credit score. Although it’s normally only a few points per inquiry, this can add up if you submit several new applications at the same time. Additionally, submitting too many applications in a short period may make you appear as if you are in need of credit, which can increase your chances of denial. As a good rule of thumb, you should wait at least a few months, or up to a year, between applications, depending on your credit score.
Credit mix
Your credit mix is an evaluation of all the types of credit extended to you, including credit cards, mortgages, auto loans, and other types of debt. Having multiple credit cards won’t significantly impact your credit mix.
How To Manage Multiple Credit Cards Responsibly
Having multiple credit cards can allow you to access a variety of benefits, from hotel elite status to cash back on your groceries. If you want to maximize your benefits by having as many cards as possible, here are a few tips to use them responsibly:
- Set up autopay or payment reminders so you never miss a payment
- Keep your credit utilization under 30% on each of your cards
- Review your card statements every month so you can spot fraudulent charges and manage your budgets
- Don’t close a credit card unless absolutely necessary
- Avoid applying for too many new cards in a short amount of time
Bottom Line
Having multiple credit cards gives you more opportunities to earn cash back or travel rewards points at the highest rates. It’s also helpful in an emergency — if one card gets declined, you always have a backup. However, having multiple credit cards can result in high annual fees and a temptation to overspend. Be sure to carefully evaluate your financial situation before submitting your application. When you’re confident you can handle another card, be sure to check out our famous card explorer to be matched with the perfect card for you.
FAQ
Is it bad to have multiple credit cards?
No, it’s not bad to have multiple credit cards. The inverse is actually true — with responsible card usage, you can increase your credit score.
How many credit cards should I have?
There isn’t one ideal number of credit cards for everyone. Instead, focus on how well you can manage multiple cards, factoring in annual fees, due dates, and cardholder benefits.
Does closing a credit card hurt your score?
Closing a credit card doesn’t directly hurt your score, but it can have some unintended consequences. If you close a card with a high credit limit, you’ll lower your credit utilization ratio, which can make your score decrease. Similarly, if you’ve had the account for a long time, closing it can reduce your average account age, which can also decrease your score. Never close your first / oldest card!
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