This is a question that may be yours, after all, it is that of many people. Is it good to have a large number of credit cards, or can it drop your score? Here we will do an analysis on this topic and we will finally answer the question that does not want to remain silent. After all, having too many credit cards increases or decreases the score?
Popular belief often leads us to believe that having too many cards can lower your credit score. And that belief leads us to another question: How many credit cards can I have? Know that the answer is that, in fact, the impact on your score does not depend on how many cards you have, but how you use them.
First of all, know that having too many credit cards can damage your credit score if you don’t pay your bills on time, or if you have so many that many remain unused. The ideal is to have the number of credit cards needed for your use. However, in some cases, having more credit cards can increase your score.
But let’s also look at the ideal way to use it to improve the score as much as possible. In short, having too many cards hurts your score when you start paying bills late, or when you have requested too many cards in a very short period, and we will go into that later. However, if you have a lot of cards, do not quit closing them, as this will hurt your score in the score as well.
Know-How Many Credit Cards Impact Your Score
First of all, know that yes, credit cards have a strong impact on your score. And for you to take advantage of this, the ideal is to understand how your credit score is calculated. Below you can find out what are the main components of your credit score.
All payments you make are considered. However, credit card payments are the most important factor here. Credit card companies are the least tolerant of arrears and quickly report to credit bureaus their customers’ defaults.
Use of credit cards
Credit utilization is an index that measures the outstanding debt on your cards in relation to available credit, that is, how close you are to credit limits on all your cards. Most people who make many cards aim to have greater access to the credit itself.
But what many do not know is that having multiple cards really improves the score, as it means that you are less likely to contract a debt that you cannot pay, precisely because you have options. However, this can damage your score if you consume a lot on all your cards and are unable to pay any bills.
Credit history duration
This is where people with multiple credit cards can experience problems. Building a responsible credit history improves your score over time. People with a high credit score have cards with an average of 11 years, and the score goes up even more when you have had the same card for 25 years, always using it correctly (without default).
New credit card
Whenever you add a new credit card to your wallet, your credit score decreases a few points: first when the lender makes a query on your score; second, when the account is actually opened. Too many consultations and too many new cards in a short period of time are warning signs for credit bureaus, usually signaling an increased risk of default.
Credit bureaus like to see how you manage your debts in different types of credit accounts. Ideally, your credit portfolio should consist of a combination of credit cards, store credit cards, real estate and auto loans or mortgages. If all of your accounts are of one type, such as cards, it can hurt your score.
What Would Many Credit Cards Be?
If you are a novice credit card user, focus on creating a credit history with one or two cards, and paying your bill correctly every month. Choose cards for benefits, like a good rewards program, cashback or a higher limit.
If you have been using cards for several years, it is a good idea to order a new card as long as it offers advantages that you do not have in others. Or, you may want to replace a card that does not have good benefits, or that covers annual fees, with a new one with advantages.
How to handle many credit cards
If you think you have too many cards and are thinking of reducing, be careful, as the worst thing you can do is close your credit card accounts without considering the impact on your score. Closing old credit cards can reduce your history, which can hurt your score.
Card exclusion ends up falling into your report, which can also hurt your score. Closing credit card accounts also reduces the amount of credit available, which can damage your debt/credit ratio if you have outstanding balances.
It is best to leave your credit cards active, but unused. If you receive a notice of inactivity from the card issuer, use it a little, just to prevent the account from being closed.
When It’s Good to Ask for Another Card
It is worth taking another credit card if you only have one or two cards, or if you have cards with low limits, as is sometimes the case with Nubank or C6 Bank. However, if you have more cards, or with higher limits, it may not be a good one. If you plan on making a new card, consider the ones that offer the benefits below:
- Low-interest rate
- High limit
However, if you have a lot of cards, don’t just start closing accounts. This can never help your credit score. Instead, leave them open and just stop using them.
Conclusion: is Having Many Credit Cards Worth It?
Always make sure you only buy what you can pay on your credit card, and always pay your bill on time. You can order new cards whenever necessary, but don’t go overboard thinking that this will increase your score, because it won’t.