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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


A question that is often asked by people in personal finance is "How many credit accounts should I hold?" This question becomes more important when you are contemplating adding tradelines to your credit score. Let's demystify this topic and provide you with the knowledge and guidelines to make informed financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

Your number of credit cards isn't just one of your personal choices for convenience. It also influences the credit score. Although you're aware of the fact that having an account with a credit card will improve your credit score, you're likely in a state of confusion about how many cards you need to have.

The Pros and Cons of Owning Multiple Credit Cards

Before we go into the number of credit cards you're required to own let's look at the advantages and disadvantages that come with having multiple credit cards.

Advantages of Owning Multiple Credit Cards

  • If you're using multiple credit cards your credit limit might be greater. A higher credit limit is helpful for emergency expenses or large purchases.
  • Use credit cards that have rewards or cashback rewards to save some money when you buy items on a regular basis.
  • The ratio of your credit utilization is likely to increase. Your credit utilization ratio is a reference to the amount of credit available that you are currently using. Credit cards that are used in multiple ways can improve your credit score by dividing your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards can increase your chances to overspend and enter debt.
  • It's easy for people to make unplanned purchases that you're not able to pay for when you have multiple credit cards.
  • Making multiple payments with credit cards can require much time and effort. This is especially true if payment schedules change.
  • The addition of more cards can result in very high utilization of credit. A high CUR can impact your credit score.
  • Different cards provide different perks. Having too few cards means being left out of many advantages.
  • On the flip side it is possible that having too many cards can make keeping track of payments due dates a struggle. It could result in charges for late payments as well as a damaged credit score.

Key Points to Consider When Applying for Credit Cards

  1. Different Benefits: Find cards that offer perks, such as travel rewards, cashback or low-interest rates.
  2. Annual Fees: Make sure the card's benefits far exceed any annual charges.
  3. Interest Rates: An APR that is low is vital unless you're sure 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, so long as you don't exceed it.

Average Number Credit Cards Should I Have

Now that we have looked at the pros and cons of owning several credit cards, let's examine the number of credit cards you ought to have. How many credit card accounts is too many, and how many are sufficient?

Financial experts recommend having between 3 and five credit cards in order to build an extensive credit profile. This provides a range of advantages and can improve the ratio of credit utilization.

Factors to Consider When Deciding The Number Credit Cards to Own

There are many factors to take into consideration when deciding how many credit cards one should have. These include:

  • Credit score and past history Your credit score and past history determine the number of credit cards to get. You are only eligible to apply for one or more credit cards if have low credit scores or a limited credit history.
  • Spending and income: Your income and expenses can be crucial. If you earn a great income and low expenses, you may be able to handle more credit card debt than someone with a lower income and more expenses.
  • Priorities and goals for your financial life Your financial goals and priorities can determine how many credit card you need to own. If you're hoping to improve the score on your credit report or earn rewards you should consider having several credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

Here are some recommended numbers of credit cards, based upon various scenarios:

  • For those with no credit history: If you have no credit history, you could qualify for one or two credit cards.
  • For people with a credit score of average If your credit score is average, then you could possess two to three credit cards.
  • For people with excellent credit scores: If you have excellent credit You may have four or more credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

Now that we have discussed how many credit cards you need let's consider how having multiple credit cards affects your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

Multiple credit card accounts can improve your credit score in several ways, including:

  • Increased credit utilization ratio Possessing multiple credit card accounts can assist in improving your CUR. The spreads your balances across 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

Possessing multiple credit cards can impact your credit score the following ways:

    • Higher risk of missed payments and delinquencies credit cards may result in an increased chance of missing payments. There is also the chance of becoming delinquent with your account.
    • More credit inquiries and new accounts The application process for multiple credit cards could lead to multiple credit inquiries and new accounts. Both of these can affect your credit score.
    • Lower average age of your account A variety of credit cards can help lower the age average of your accounts. In turn, it could affect your credit score.
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