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Does Having Multiple Credit Cards Affect Your Credit Rating

Potential Issues With Having A Lot Of Credit Cards

Does Having Multiple Credit Cards Hurt Your Credit Score? Good or Bad?

As mentioned above, signing up for a lot of cards at once in a short period of time could hurt your credit score. Its risky business to grab bonus after bonus and spend more than normal to get it.

It can also be difficult to manage payments for so many credit cards at once. If someone signs up for six different cards all through different credit card companies, then thats six different mobile apps or websites that need to be checked regularly to make on-time payments. Each card will also likely have a different payment due date. Thats a lot to keep track of.

If cardholders dont pay off all their monthly balances on time, then theyre not only looking at late fees and spiraling debt, but also a growing credit utilization rate that will most likely lead to a decrease in credit score. This could hurt down the line when theyre ready to finally buy that house or car.

  • Fee on balance transfers

How Multiple Credit Cards Affect Your Credit Score

Your payment history is one of the most important factors in your credit score. Having multiple credit cards can increase the risk of you missing payments, which will damage your credit score. But on the flipside, if youre able to keep on top of all your payments, this can have a positive impact on your credit score. Setting up monthly direct debits for each card can help you to do this.

Having several credit cards and using a smaller portion of your credit limit on each can also help your credit score if youre careful. This is because your credit utilisation ratio will be lower. This is the portion of credit youre using out of the credit limit available to you, and its calculated on a per account basis. Keeping it below 30% can have a positive effect on your credit score.

For example, lets say you had one credit card with a credit limit of £2,000 and you were using £1,500 of it. Your credit utilisation would be 75% and this could negatively affect your credit score.

However, if you were to spread your £1,500 worth of purchases across several credit cards, your credit utilisation ratio would fall, boosting your credit score. For example, if you had 3 credit cards, each with a £2,000 credit limit, and you spent £500 on each, your credit utilisation rate would be 25% for each one.

In other words, using multiple cards will result in multiple accounts of low credit utilisation instead of one account with high credit utilisation.

Tips On Managing Multiple Credit Cards

Remember, having multiple credit cards doesnt necessarily harm your credit score. In fact, your credit report benefits from using established credit cards at least every few months. Just keep a couple simple things in mind to make sure youre getting the maximum benefit out of your cards:

  • Paying on time is the most important thing. When you track multiple cards, online banking can be a helpful tool for managing multiple accounts. Setting automatic payment reminders can help you keep your due dates straight. If youre a Bank of America card client, learn more about setting up Mobile and Online Banking alerts.
  • Dont use all of your available credit. Try to use no more than 30 percent.
  • If youre new to credit cards, make sure you can manage your first card. Wait for a set period, like 12 monthly billing cycles, before adding another one.

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Risks Of Having More Than One Credit Card

While there are some clear benefits to having more than one credit card in your wallet, there are also some possible drawbacks and red flags to keep in mind:

  • More potential for debt:If you struggle with overspending, adding more credit cards to the mix can do more harm than good. Consider restricting the number of cards you have if you believe more available credit will tempt you to spend more.
  • Harder to keep track:The more credit card accounts you open, the harder it will be to keep track of everything. You can lighten your load by setting up automatic payments and using a budgeting app to track all transactions in one spot, but even then, something may slip through the cracks. Plus, with multiple cards, it can be a challenge to remember which one to use to maximize your rewards and benefits with each purchase.
  • May hurt your credit:An additional hard inquiry on your credit report won’t impact your credit score by much — according to FICO, an inquiry typically knocks fewer than five points off your score. But if you apply for multiple credit cards in a short period, it can have a compounding negative effect on your credit.

Let Your Credit Score Slip


Why it hurts you: Credit card companies look at your score to make a decision on whether you get a card.

The better your credit score, the better the card you can get. If you have excellent credit, you have your pick of cards. Big sign-up bonus? Go for it. Want a balance transfer? No problem. Low interest rate? You got it.

But if you have bad credit, your choices will be severely limited.

To find out where you stand, you have several choices. An increasing number of credit card issuers give out credit scores for free. These scores are often not official FICO scores, but should give you an idea of how strong your credit is. And Discover and Capital One both offer free credit score services, neither of which requires you to be a customer.

Long story short, checking your credit score or credit report does not hurt your score.

Lenders differ widely on the scores you need to qualify for their cards. How can people find out the credit score requirements of a company prior to applying for a credit card?

You can get a good idea of which cards you qualify for by using CardMatch, a free service.

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Why You Might Want Multiple Credit Cards

It might not seem necessary to have more than one credit card, and for many people, it’s not. But there are some reasons to consider having several cards in your wallet.

For many people, it comes down to . If you’re paying your bill on time and in full every month, you can get a lot of value out of credit card sign-up bonuses and ongoing rewards.

Each credit card will usually have its own set of rewards rates. If you spend a lot on groceries, some cards offer more cash back, points, or miles in that spending category. But if you also spend a lot at restaurants, you may want another card that rewards you more for dining purchases.

The same goes for credit card perks. Travel cards, for instance, offer a wide variety of benefits. With hotel cards, you can often get a free night’s stay every year when you pay your annual fee, plus complimentary elite status with the hotel brand. If you add in an airline credit card, you may also get free checked bags and priority boarding.

Finally, some credit cards offer other features that you may want to take advantage of. For example, if you need to finance a large purchase and pay it off over time or pay down a high-interest balance, many cards offer introductory 0% APR promotions that can save you money.

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Do Multiple Loan Inquiries Affect Your Credit Score

Consumer credit reports contain a wealth of information about you and your financial relationships with lenders. Auto loans, credit cards, mortgages, student loans and other creditor relationships commonly appear on your credit reports. What they all have in common is that you likely applied for credit with these lenders and they, in turn, pulled a copy or copies of your credit reports before approving your application.

Each time your credit report is pulled, that credit inquiry appears on your credit report for a period of time. Credit inquiries include the date they were made and the inquiring company’s name. Some inquiries are considered by credit scoring systems and can affect your credit score. However, multiple loan-related inquiries made within a short period of time are either entirely ignored or treated as a single search for credit, thus protecting your credit scores.

Is It Good To Have Multiple Credit Cards

How Many Credit Cards Do You Have Open At Once And How Does That Affect Your Credit?

The effect on your credit score is probably one of your major concerns about having multiple credit cards. That is a common consideration, but having more than one credit card can actually help your credit score by making it easier to keep your low.

For example, if you have one credit card with a $2,000 and you charge an average of $1,800 a month to your card, then your credit utilization ratiothe amount of your available credit that you useis 90%. Where credit scores are concerned, a high credit utilization ratio will impair your credit score. It may not seem fairif you have just one card and pay it off in full and on time every month, then why should you be penalized for using most of your credit limit? But thats how the credit scoring system works.

Is it bad to have multiple credit cards? No, if you handle your credit wisely, keep your credit line utilization ratio below 30%, and keep track of payment due dates.

To improve your credit score, most credit experts recommend that you should avoid using more than 30% of your available credit per card at any given time. By spreading your $1,800 in purchases across several cards, it becomes much easier to keep your credit utilization ratio low. This ratio is just one of the factors that the FICO credit scoring model takes into account in the amounts owed component of your score, but this component makes up 30% of your credit score. Only your payment history is weighted more heavily in determining your credit score.

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Zero Balance And Your Credit Report

Having a zero balance on your credit card doesnt mean that the zero balance will show up on your credit report or that the zero balance will be used to calculate your credit score. Heres why: your credit card details are reported at various times throughout the calendar month . Because of this, your credit card balance might not be $0 on the day your credit card issuer reports to the credit bureaus, depending on whether you’ve used your credit card after you paid the full balance.

For example, if you make a $100 purchase on the 5th of the month and pay it in full on the 17th of the month, but your credit report was updated on the 12th of the month, your credit report won’t show a zero balance. Instead, it will reflect the balance on the 12th.

Unless your balance is always zero, your credit report will probably show balance higher than what you’re currently carrying.

Fortunately, carrying a balance won’t hurt your credit score as long as the balance you do have isn’t too high . Higher credit card balances are considered riskier as creditors and lenders weigh whether you can handle an additional debt obligation.

How Holding Multiple Credit Accounts Can Affect Your Cibil Score

The CIBIL score is evaluated and determined through a complex mathematical formula that is based on several parameters like debt repayment history, timeliness of debt repayments, frequency of loan and credit card applications and rejections, number of existing loans and credit cards, etc. Holding multiple credit accounts does not affect the CIBIL score, the lack of discipline in debt repayments does.

It may become a challenge to maintain a good CIBIL score when you hold multiple credit accounts. However, fret not! It isnt that difficult either. Lets discuss how you can achieve and maintain a good CIBIL score on all your credits.

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You Only Need One Card To Build A Good Score

Using credit consistently and responsibly is really the only way to build a good credit score. For most people, the easiest way to do this is to get a credit card, use it conscientiously and make payments on time. This will add up to a lot of positive information on your credit reports, and, consequently, a better credit score.

But will you reap even more credit score benefits by having multiple credit cards? NerdWallet reached out to Anthony Sprauve, senior consumer credit specialist at FICO, which is responsible for the most widely used credit scores in the United States. You dont need multiple credit card accounts to have a good FICO score,” Sprauve said in an email. “You can have a high score with one well-managed credit card account.

It’s a common misconception that you need multiple credit cards to have strong credit scores. That idea may be rooted in a misunderstanding about one element of credit scoring formulas: the mix of credit accounts on your report. Credit mix accounts for 10% of your FICO score. But “mix” in this context refers to having different types of accounts on your credit report.

You are rewarded for having multiple kinds of accounts auto loan, mortgage, line of credit, etc. but you are not penalized if you dont,” Sprauve explained.

Does Getting More Credit Cards Affect Your Credit Score

Does Applying Multiple Credit Cards Hurt Your Credit Score?

When it comes to your credit score, how you use credit cards is more important than the number of cards you have. Whether you own two credit cards or 12, your score will suffer if you accrue debt you can’t pay.

On the other hand, if you use your cards to pay for purchases that you then pay off right away, having more credit cards can result in a credit score increase. That’s primarily because more cards result in a higher combined credit limit. If you use only a small portion of that limit each monthexperts recommend 30% or lessthe credit scoring algorithms will reward you for responsibly managing credit.

But this means that it’s important to keep spending in check. Consider sticking to a monthly budget to help, or using certain credit cards only for specific purchases. It’s also crucial to pay off your balance completely each month, and on time. That will ensure your credit cards are working as hard as possible for you and your credit score.

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Pay Annual Fees For Cards With Better Rewards

Sometimes specific rewards may justify paying an annual credit card fee. Consider loyalty to specific brands beyond a specific retailer, since most retailer cards dont require an annual fee.

The key brands here involve travel. If someone stays most often at Marriott hotel properties or flies American Airlines, he or she may choose to apply for a Marriott Bonvoy or an AAdvantage-branded credit card. Most of these brand-loyal credit cards charge an annual fee. Try to pick the credit card that offers the most likely-to-be-used benefits in excess of the annual fee.

Consider these travel brand-specific credit cards: United Explorer Card, World of Hyatt Credit Card* and Alaska Airlines Visa® credit card*. All of these cards charge an annual fee. Each of these cards represents a specific brand loyalty for travelers. For example, the World of Hyatt card offers a free nights stay annually at one of Hyatts lower-tiered hotels. That $95 annual fee beats room rates that could be as high as $399.

The key for any cardholder is to identify his or her own behaviors that can provide an opportunity for greater rewardsbefore shelling out an annual fee.

Things To Consider Before Applying

Before you rush to apply for credit, make sure youre ready. Heres what to consider doing prior to applying.

Check your credit report: The first step is to get a copy of your credit report. Until April 20, 2022, you can get free weekly credit reports from the three national credit reporting agencies, Equifax, Experian and TransUnion. To get your free reports, go to As you review your credit report, check for any errors in your report. If there are any, take steps to fix them before you approach a credit card issuer. Also check to see if youve had any other recent hard inquiries.

Consider any other upcoming credit applications: Be mindful about whats on your horizon before you move forward with applying for a new credit card. For example, if you think that you will be applying for a mortgage or car loan soon, you may not want to apply for a card and rack up multiple inquiries at once. It may make sense to get your mortgage or car loan first and wait for a little while to go after the credit card.

Dont plan to ditch your old cards: Just because you hope to get a new card, dont start canceling the other cards in your wallet. Remember, length of credit history makes up 15% of your credit score. Youll also reduce your total available credit by canceling a card, which could drive up your credit utilization ratio if you have hefty balances on other cards.

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