The Ideal Number Of Credit Cards

Some people have the mistaken idea that if you own many credit cards, it can add up to your credit rating. But is this really true? Can multiple credit cards really boost your credit score? To fairly answer this question, let’s talk about how your credit history is calculated in figures.

There are basically 5 categories used in calculating the FICO score and these include: payment history (35%), credit-to-debt rate (30%), age of credit history (15%), types of debts or accounts (10%) and credit report inquiries (10%).

It is true that each time you open a new credit card, that account will be reflected in your report. However, what matters most is how well you manage each of your credit card accounts. If you own a lot of cards, yet you have outstanding balances on each and you’re frequently late with your payments, obviously, you won’t be enjoying a high credit score at all.

Aside from timely payment, your credit-to-debt rate is an important factor. If you own at least two or three cards, it is a good idea to keep your balances minimal. Ideally, you should stay within 30% to 40% of your credit line.

The types accounts you have also matters so you may want to show your flexibility and credit worthiness by handling different types of debts. Aside from one or two credit cards in your name, having a car loan and a home loan approved can surely boost your rating.

What is the ideal number of credit cards a person should have?

Horizon Gold Credit Card
The answer to this question really depends on your financial capacity and your lifestyle. Having at least one or two cards should be fine but if you feel that you need to get another card for a specific purpose, then it’s up to you.

Nevertheless, managing too many credit cards can prove to be difficult especially when it comes to paying balances. You may be prone to spend more or charge more to your cards just because you still haven’t used your available credit.When repayment comes, you may realize that your salary is not enough to pay off all your debts for the month.

Remember that credit cards are often accompanied with high interest rates and late penalty fees. If you get in the habit of paying only your minimum due or submitting your payments late, you could easily get stuck in bad debt. Even worse, your personal credit history is bound to suffer. Before signing up for a new card, consider your obligations well and make sure that you can stay in control.

One comment

  1. Having lots of credit cards is a real show-off. If its necessary to your line of work or lifestyle, and you can afford it, then it’s fine to have 2 or more. But if you think your salary doesn’t permit you to have a number of credit cards, then stick with one. You’ll have a huge problem when you insists on having more debt than what you earn.

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