If you’re trying to build or improve your credit score, you might be wondering, “how many credit cards can I have?”
The short answer is that…well, there really is no answer.
Unfortunately, this isn’t always clear-cut. While having multiple credit cards might be ideal for one person, having just one might be better for another.
We’ll break things down for you and help you figure out the answer to the question, how many credit cards can you have, in this complete guide. Let’s dive in!
How Many Credit Card Accounts Are Too Many?
Credit history and credit scores are complicated businesses. It can be tough to say how many credit cards are too many or too few because it’s not usually the number of credit cards that matters but your credit utilization ratio.
Most credit bureaus, however, recommend that you have no fewer than four separate accounts (keep in mind that this includes things besides credit cards, too, like auto loans or mortgages).
Not having enough credit accounts shows that you have a thin credit history – something that can make lenders view you as riskier.
Plus, having few credit card accounts makes it more likely to reach the upper end of your credit utilization ratio (which is something you don’t want to do).
What is a Credit Utilization Ratio?
A credit utilization ratio is how much of your credit you are actually using.
If you have a credit line of $100 and you use $10, you have a credit utilization ratio of 10%.
Ideally, you should keep your credit utilization low – ideally around 10% of your limit. This is good for your credit score and helps you avoid credit card interest.
Should You Have Multiple Cards?
Whether or not you’re able to pay your bills on time and have solid spending habits will likely determine how many credit cards you should have – as well as if you have other types of debt in your name, too, like a mortgage or student loans.
The average American has three credit cards and 2.3 store cards (or “retail” cards).
That doesn’t necessarily mean that having multiple cards is right for you. If you have a not-so-great background when it comes to your payment history or in maxing out credit limits on credit cards, you might want to err on the side of caution and just have fewer cards.
Keep in mind that you have to be at least 18 years old to apply for a card and it can be more difficult to get approved by a credit card issuer if you are younger than 21.
Rather than obsessing over whether you should sign up for another credit card just to improve your credit portfolio, consider working on building solid financial habits instead. Make sure you have a reliable income, good organizational skills, and a plan to manage your money wisely.
The Problems with Multiple Credit Cards
Having more available credit via multiple credit cards doesn’t necessarily just mean that you just have more options to choose from when you open up your wallet – it can also open the door to several potential problems, which may require credit repair in the future.
Here are some credit card pitfalls to watch out for.
Hard Inquiries
When you apply for a credit card (or any kind of credit, for that matter), it will create a “hard inquiry,” which can temporarily ding your credit score by a few points.
Although the effect is minimal and short-lived, applying for multiple credit cards in a short window of time can show that you’re a credit risk. Plus, those hard inquiries will line up!
Instead, space your credit applications out by about six months apiece. This will prevent those hard inquiries from seriously impacting your credit score.
Billing Cycles
The more credit cards you have, the more you have to keep track of. That seems obvious, but if you’re already finding that you miss payments because you have too many accounts to juggle, then having multiple credit cards might not be right for you.
Work to get yourself back on track before you apply for another credit card. You might want to consider changing all of your due dates to the same day or automating your monthly payments.
Future Plans
Last but not least, it’s important to consider how applying for new credit in the form of additional credit cards will affect your future plans. As mentioned earlier, applying for a new credit card can impact your score for about six months. If you’re planning on a big-ticket purchase in the near future – like a house – you might want to wait to apply for a new credit card until later on down the road.
How Does a Credit Card Impact Your Credit Score?
There are a few ways that a credit card can impact your credit score. Here’s how.
Payment History
Payment history is probably one of the most important parts of all types of credit, but especially consumer credit like credit cards and car loans.
Up to 40% of your credit score is determined by your payment history, meaning if you miss. payment, it’s going to impact your FICO score the most.
Long story short – don’t spend money you don’t have and find better ways to manage payments and build good financial habits.
Paying on time is far more important than the number of credit cards you have.
Credit Utilization
We mentioned this briefly already in this post, but credit utilization is simply how much of your credit limit that you have in use. This accounts for about 30% of your credit score.
Ideally, you should keep your balances below 30% in order to keep your credit utilization ratio low.
Credit Age
Last but not least, your credit age. This is the part of your credit score that you have the least control over. You can’t make yourself older! You just need to wait for time to pass.
However, there are steps you can take to improve this factor over a short period of time.
The theory is this – creditors like to see that you have a history of long, stable credit and that you know how to wisely use and spend money.
Avoid closing cards if you can, as this can impact your credit age. Of course, if you have a compelling reason to get rid of a card, like high fees, it can be worth the temporary ding to your score.
However, closing a credit card does impact your credit age, so it’s something to keep in mind.
Is it Good to Have Multiple Credit Cards?
The moral of the story is this – it’s not necessarily bad to have multiple credit cards, but it’s not necessarily good, either.
Having more than one credit card can help your credit score by keeping your debt utilization ratio low, especially if your only current credit card doesn’t have a higher credit limit.
However, you should also avoid applying for multiple credit cards in a short period of time, since this can impact your FICO score, too.
Consider having a few different cards with different benefits (like one retail card, one travel rewards card, and one cashback card) and keep your balances low on all three.
When you use credit wisely, it can be used as a tool to help you meet your financial goals – instead of something that’s just holding you back. So spend wisely!
FAQ: How Many Credit Cards Can You Have?
How many credit cards can a person legally carry?
There is no maximum number of credit cards you can legally carry. Although a specific issuer might cap the credit you are able to have, the exact number of cards isn’t usually an issue.
What is the max amount of credit cards you should have?
Ideally, you should keep no more than three to five different credit cards in your wallet. If you have any more than that, there’s a chance that you either aren’t using them all or that you’re overusing credit and overextending yourself financially.
Is owning too many credit cards bad?
That depends. Having too many credit lines, even unused ones, can hurt your credit score by making you look risky to lenders. However, the opposite is also sometimes true – you can hurt your credit score by not having enough open lines of credit. Therefore, striking a balance is essential.
How many credit cards can you get in a year?
Most credit card companies limit the number of cards you can get within a year. Ideally, you shouldn’t be applying for multiple credit cards at once. At the very most, you should never apply for more than three cards within a 12-month period.
