Can Too Many Credit Cards Harm Your Credit?

Jan 17, 2024 By Triston Martin

Credit cards are convenient and safe financial instruments. These cards are a great alternative when you don't have any cash on hand or don't want to carry cash when making purchases. Large purchases like a new television or big appliance might also benefit from using these coupons.

While traveling, they come in handy for various travel-related benefits, such as zero liability fraud coverage, lost or stolen card replacement, and auto rental insurance—not to mention earning points. But is it possible to have too many credit cards?

Factors to Take Into Account

There are a lot of elements to consider when deciding how many credit cards you should have. Some people only need one to three credit cards, while others open a slew of new ones as they receive promotional offers in the mail or online that entice them. Rather than how many cards you have, it's more important to consider how you use them and how you got them.

As a general rule of thumb, it may make sense to have a primary card that you use for most of your expenditures, as well as a backup or specialist card in case something happens to your primary card. Having too many open credit lines about your income, even if none of them are utilized, might make you appear hazardous to lenders and lower your credit score, so keep this in mind.

How Your Credit Rating Is Calculated

To begin, let's look at the fundamentals of owning a credit card and how it affects your credit score. It's a good way to figure out if you have too many credit cards or not enough. Below is a short assessment of your credit score's major components regarding the quantity of plastic you carry.

Paying history

This is the most important element, accounting for 35% of your overall credit score. Credit card payments are the most important variable in this calculation, even though it considers all of your monthly debt payments. As soon as a payment is late, credit card issuers are the least lenient and are fast to notify credit bureaus.

Credit-to-debt balance

This ratio assesses how much debt you have on your credit cards compared to how much credit you have available to you. Credit usage accounts for 30% of your overall credit rating. If your ratio exceeds 30%, it will detract from your final grade.

Credit-history length

People who have several credit cards may have difficulty in this area. Your credit score rises over time if you have a history of timely payments. For those with good credit ratings, the average age of all their credit cards is 11 years. 15 percent of your overall score is based on this.

The credit mix

10% of your score is based on your credit mix. Credit bureaus are interested in how you handle debt from various sources. You want a mix of different types of credit, such as credit cards, retail accounts, and installment loans like automobile loans or home equity lines of credit.

The Appropriate Amount of Cards to Have on You

Your credit score is directly influenced by the number of credit cards and how you use them. Credit card users just starting should focus on using one or two cards and paying the bill in full each month. Adding credit cards for particular goals like a robust rewards program or improved travel advantages might make sense as long as they are not acquired all at once.

A new credit card may make sense if you've been using credit cards for a long time and are certain that you can get better conditions, so long as you're willing to carry new amounts.

Dealing With Too Many Cards

If you fear having too many credit cards or have ones you no longer use, don't close them without first contemplating the impact on your credit score. In the long run, it may be detrimental to your credit score if you close outdated credit cards.

Closed accounts' payment history ultimately disappears from your record, lowering your credit score. Debt-to-credit ratio and credit usage might be harmed if you have outstanding bills when you close credit card accounts.

Your credit card accounts should remain open so that you can freeze these cards. If the card issuer sends you a notice regarding inactivity, use the card for a short period to avoid the account being canceled.

The Bottom Line

Under any of the following circumstances, having several credit cards might harm your credit score:

  • Inability to pay off current debt
  • More than a third of your available credit is taken up by unpaid debt.
  • You've added an excessive number of cards in a short period.

You don't have a wide variety of credit accounts in your name, such as a mortgage or a car loan. However, you shouldn't immediately start deleting accounts to lower the number of cards you have. Your credit score will suffer as a result.

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