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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 of the questions that stumps people in the field of personal finance is "How many credit accounts should I hold?" This question becomes more important when you are considering the addition of tradelines to your credit report. Let's simplify this subject giving you the knowledge and direction to make sound financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

The number of credit card you use is not only an issue of personal preference. It also affects your credit score. While you know that having a credit line can help your credit score, you're probably confused as to how many credit cards you need to have.

The Pros and Cons of Owning Multiple Credit Cards

Before we get into the number of credit cards you should have we'll first take a look at the advantages and disadvantages when you have multiple credit cards.

Advantages of Owning Multiple Credit Cards

  • If you've got several credit cards the credit limit may be higher. A credit limit of high amount is useful for emergencies or large purchases.
  • Use credit cards with rewards and cashback program to cut costs on items on a regular basis.
  • Your ratio of credit utilization will rise. Your credit utilization ratio is a reference to the percentage of your available credit that you currently use. A variety of credit cards can increase your credit score through dividing your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards can make it more likely to overspend and fall into debt.
  • It's easy to make unplanned purchases that you're not able to pay for when there are a lot of credit card accounts.
  • managing multiple credit card accounts can require much time and effort. Particularly if the pay schedules vary.
  • The addition of more cards can result in very high utilization of credit. A high CUR can affect your credit score.
  • Different cards come with different perks. Insufficient cards mean losing out on a variety of benefits.
  • On the flip side it is possible that having too many cards can make keeping track on payment due dates a challenge. This can result in the occurrence of late fees and damage to your credit score.

Key Points to Consider When Applying for Credit Cards

  1. Diverse Benefits Look for cards that have advantages, such as cashback, travel rewards, or low-interest rates.
  2. Annual Fees: Check to ensure that the card's benefits are greater than any annual fees.
  3. Interest Rates: In order to get a low interest rate, it's vital unless you'll pay off the balance every month.
  4. Credit Limit: A higher credit limit can benefit your credit utilization ratio, if you don't exceed the limit.

Average Number Credit Cards Should I Have

After looking at the benefits and disadvantages of owning multiple credit card accounts, let's take a look at the number of credit cards you should have. How many credit card accounts is enough? How many are enough?

Financial experts recommend having 3 to 5 credit cards for an overall credit profile. This can provide a variety of benefits and helps improve the ratio of credit utilization.

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:

  • Credit score and past history Your credit score, history and scores will determine how many credit cards you can have. You are only eligible only for one or two credit accounts if you have a low credit score or a less than stellar credit history.
  • In addition to your expenses, your earnings and expenses will be vital. If you have a high income and relatively low expenses, then you can manage more credit cards than those with lower incomes and more expenses.
  • Priorities and financial goals: Priorities and financial goals will also determine how many credit cards you should own. If you want to improve your credit rating, or earn rewards points, think about owning a number of credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

Here are some suggested numbers of credit cards that are based off of different scenarios:

  • For people who do not have credit history: If you're not creditworthy, you could be eligible for one or two credit cards.
  • For those having average credit scores If your credit score is average, you might be able to have three or more credit cards.
  • for those with high credit scores: If you have excellent credit you could have at least four credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

Now that we've discussed how many credit cards you're required to have Let's see how applying multiple credit cards can affect your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

Multiple credit cards could improve your credit score in a variety of ways that include:

  • A higher credit utilization ratio Possessing multiple credit cards could help improve your CUR. It spreads your balances among 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

Owning multiple credit cards can impact your credit score the following ways

    • Higher risk of missing payments and delinquencies: having a large number of credit cards can increase an increased chance of missing payments. There is also the possibility of being in delinquency with your account.
    • New credit inquiries and increased credit accounts Credit card applications for multiple cards could create multiple credit inquires and new accounts. Both can impact your credit score.
    • Lower average age of accounts The presence of multiple credit card accounts can help reduce the age average of your accounts. This can lower your credit score.
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