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How Many Credit Cards Should I Have - Coast Tradelines

Dec 19

How Much Credit Cards Should I Have? The Intersection of Credit Cards and Tradelines Explained


One question that perplexes individuals with regards to personal finance is "How many credit accounts should I hold?" This question becomes more important when you are contemplating adding tradelines to your credit report. Let's simplify this subject and provide you with the understanding and roadmap to make confident financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

Your number of credit cards isn't just a matter of personal convenience. It also influences your credit score. While you know that having an account with a credit card will improve your credit score, you're likely confused as to how many credit cards you need to have.

The Pros and Cons of Owning Multiple Credit Cards

Before we look at how many credit cards you're required to own before we look at the benefits and downsides that come with having multiple credit cards.

Advantages of Owning Multiple Credit Cards

  • If you've got several credit cards your credit limit might be higher. A high credit limit is ideal for emergencies or large purchases.
  • Use credit card rewards as well as cashback to save when you purchase things on a daily basis.
  • Your credit utilization ratio will improve. The credit utilization ratio relates to the percentage of your credit available that you currently use. Credit cards with multiple accounts can improve your credit score by dividing your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards are a great way to increase the likelihood to overspend and go into debt.
  • It's not difficult to make unexpected purchases that you're not able to pay for when there are a lot of credit card accounts.
  • Managing multiple credit cards can require time and effort. More so if the payment schedules vary.
  • More cards can result in the utilization of credit to be high. A high CUR could affect your credit score.
  • Different cards provide different perks. Having too few cards means being left out of many benefits.
  • On the other hand, having too many cards can make keeping track of payment due dates difficult. It can lead to charges for late payments as well as a damaged credit score.

Key Points to Consider When Applying for Credit Cards

  1. Diverse Benefits Look for cards with various perks, such as cashback, travel rewards, or low-interest rates.
  2. Annual Fees Check to ensure that the card's benefits outweigh any annual charges.
  3. Interest Rates: Lower APRs are crucial unless you're confident that you'll have enough money to pay off the balance each month.
  4. Credit Limit: A higher credit limit could boost your credit utilization ratio, provided you don't max it out.

Average Number Credit Cards Should I Have

Now that we have looked at the pros and cons of owning multiple credit cards, let's discuss how many credit card you should have. How many credit card accounts is too much? And how many are sufficient?

Financial experts recommend having 3 to 5 credit card accounts to ensure an rounded credit profile. This allows for various benefits and can also help with the credit utilization ratio.

Factors to Consider When Deciding The Number Credit Cards to Own

Many factors should be considered when deciding how many credit cards to own. These include:

  • History and credit score: Your credit scores and histories will affect the number of credit cards you are eligible for. It is possible to only qualify on one or two credit lines if have low credit scores or have a poor credit record.
  • The amount of your expenses and income will also be crucial. If you have a substantial income and low expenses, you could manage more credit card payments than those with lower incomes and higher expenses.
  • Priorities and financial goals The goals you have for your finances and the priorities will affect how many credit cards you should possess. If you're trying to improve your credit score and earn rewards, consider owning many credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

Here are some suggested numbers of credit cards based on various scenarios:

  • For people who do not have credit history: If you don't have a credit history, you could qualify for one or two credit cards.
  • For those with a credit score of average If your credit score is average, then you could be able to have three or more credit cards.
  • For those with excellent credit scores: If you have excellent credit You may have at least four credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

Now that we've looked at how many credit cards you're required to have, let's explore how applying multiple credit cards can affect your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

Multiple credit cards be beneficial to your credit score through a variety of ways for example:

  • Increased credit utilization ratio: Possessing multiple credit card accounts can help improve your CUR. The spreads your balances over multiple cards.
  • Diversified credit mix: A diversified credit mix can help improve your credit score.

Negative Impact of Owning Multiple Credit Cards on Credit Score

Multiple credit cards may hurt your credit score in the following ways:

    • A higher risk of missed payments and delinquencies: Owning a lot of credit cards can lead to an increased risk of not making payments. There's also a chance of becoming indebted on your accounts.
    • Credit inquiries are increasing and so are new accounts: Applying for multiple credit cards could create multiple credit inquires as well as new accounts. Both of these could lower your credit score.
    • A lower average age for your account Possessing multiple credit cards can help lower the average age of your accounts. This can lower your credit score.
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