Does Having Multiple Credit Cards Help Your Credit?

If you’re like most Americans, you probably want to build your credit because having a good credit score is essential for so many things in the United States. So, does having multiple credit cards help your credit? We will answer this question in much detail below.

Does Having Multiple Credit Cards Help Your Credit?

Yes, having multiple credit cards will help your credit. However, for the credit card accounts to help your credit, you must make all of your payments on time and you must keep your credit card balances low. As a rule of thumb, you should not use more than 30% of your available credit. Ideally, you should keep your credit utilization between 5% and 10%. Keeping your credit utilization low will help your credit because it accounts for 30% of your credit score.

If you simply open credit cards and leave high account balances and miss your payments, you will be doing yourself and your credit a disservice. You must make all of your payments on time to build good credit. Missing even one payment can have a devastating impact on your credit score. Your payment history accounts for 35% of your credit score, so ensuring that all of your payments on time is essential to using a credit card to build good credit.

Also, if you want to open credit cards to help your credit, you should not open too many accounts within a short period of time. This is so because each time you apply for a credit card or a loan, a hard inquiry is placed on your credit report. Although a single hard inquiry will cause a small drop in your credit score (50 to 10 points), having too many hard inquiries within a short period of time will significantly lower your credit score.

Having multiple credit cards will also help your credit score because it raises your credit limit. The higher your credit limits, the less credit you will utilize. The lower your credit utilization, the better your credit score will be.

For example, if you have 1 credit card with a $1500 credit limit and you’re using $1000 of your available credit, your credit utilization will be using 67% of your available, which is extremely high and will lower your credit score.

However, if you have 3 credit cards, with a total credit limit of $7000 and you’re only using $1500 of your available credit, your credit utilization will be 21% of your available credit, which is lower than the recommended maximum credit utilization of 30%. Having credit utilization below 30% will improve your credit score.

How Many Credit Cards Should You Maintain?

There isn’t a single size that fits everyone. Most people have one credit card, but there is nothing wrong with having 2 to 3 credit cards, so long as you properly manage your debt and make timely and complete payments on all of your accounts.

If you want to open more than one account, you should not open too many accounts within a short period of time because your credit score will take a hit from several credit card applications within a short period of time.

That said, having too many open credit cards can impact you negatively. This is so because lenders often view persons with too many open credit cards as risky since they can rack up a lot of debt fairly quickly using their open accounts.

So, while there is no magic number of credit cards that you should maintain, having two to three open credit cards is the ideal number according to the experts at Credit Score Planet. If you have more open accounts, you risk getting denied by the next card issuer.

Having a number of different credit cards allows you to take advantage of the different rewards and benefits that each credit card provides. For example, if a credit card offers you 5% cash back for gas purchases, you can utilize that card for your fuel purchases. If a different credit card offers you 2% cashback on grocery purchases, you can utilize it for your grocery purchases. You should have a standard rewards credit card that offers at least 1% cash back or rewards for your general purchases where a higher reward does not apply.

How Many Credit Cards Does the Average Person in the U.S Have?

The average person living in the United States has between 3 and 5 credit cards. That said, although having several accounts open that are in good standing and are paid in time is beneficial and will help you build good credit. How you actually use your credit card is more important than the number of open credit card accounts you have. Paying your card on time is extremely important to building good credit, and keeping your credit utilization low is also important to obtaining a good credit score.

Credit Score Planet Frequently Asked Questions

1. How many credit cards should I have to improve my credit score?

There is no specific number of credit cards that will help you improve your credit score. On average, people have 3 to 5 credit cards. The way you improve your credit score is to properly manage the credit card(s) that you have. Making your payments on time and leaving little to no balance on your credit cards will help you improve your credit score.

2. Does having too many credit cards hurt your credit?

No, having too many credit cards that you pay on time and have low balances on will not hurt your credit.

3. Is it a good idea to have multiple credit cards?

It’s good to have multiple cards that offer rewards and benefit, so long as you only spend only as much as you can afford to pay off at the end of the month.

4. Is it better to close a credit card or leave it open with a zero balance?

Sometimes it may be better to leave a credit card open, especially if you’ve had the credit card for a long period of time. This is so because the longer you’ve had a credit card open, the better it impacts your credit score because the credit reporting bureaus factor your account age into your credit score. So, the older your accounts, the better your credit score will be.

5. Is having three credit cards too much?

No, having three credit cards is not too much. In fact, the average American has anywhere from 3 to 5 credit cards. So, if you have three credit cards, you have the average number of credit cards.