Is having a lot of credit cards good or bad for your credit score?
Wednesday, December 31st, 2008 at
1:30 am
achyled asked:
I’ve heard both… my teacher said having a lot of credit cards will lower my score. But I also read that part of your credit score is based on the formula
I’ve heard both… my teacher said having a lot of credit cards will lower my score. But I also read that part of your credit score is based on the formula
how much you owe/ total credit , so in that case having more cards would be better. I have 7 cards and I only use 2 of them. Should I cancel my other cards?
http://creditcardsandchecks.com
Tagged with: Cancel • Cards Credit • Credit Score
having too many cards is bad for your credit score, yes having access to lots of credit is good but this should be due to having equity in a house. the biggest marker is your debt to income ratio, also you need to pay your bills on time and have a history of repaying loans in a speedy fashion
I have been told in the past that if your NOT using cards call the CC company and cancel them because.. if your go for a loan and you have all 7 open they are less likely to give you a loan because they see those accounts open and you could use them.. SO CLOSE the ones you don’t use..PLUS with Identity theft someone could steal your unused cards and have a “field Day” without you knowing for a month..
yes you should cancel the other cards. The formula you ste is only partial correct. If you apply for a loan and have credit cards that are not being used, the credit issuing agent will factor in the assumption that tomorrow you will max out those cards. That lowers your score. Get rid of any card you are not using.
Hello,
Cancelling a credit card can actually hurt you. I would suggest holding on to them until they expire and not reissue them. Make sure the balance on the 5 you do not use is fully paid. Also, a big factor is credit limit. I personally think its better to have 3-4 credit cards with a high limit than 7 with mid-low limits.
No, don’t cancel your other cards. Part of what makes a good credit score is also the length of time you’ve had the card. The longer the history (provided you’re in good standing with them) the better. Closing accounts can actually hurt your score.
7 cards isn’t too bad but definitely don’t apply for any more–not even store cards to get that nifty 10% off. Ultimately they aren’t worth it since applying for new credit can lower your score.
And I think it’s less important how much total credit is available to you then the ratio of how much you owe vs. how high your limit is on each card. So let’s say of your 7 cards, you only owe on one of them, but your limit is $800 and you owe $795–that could hurt your score a little.
So overall, just keep your balances low, pay on time every month (preferably more than the minimum payment), don’t apply for new credit, don’t cancel unused cards, and if you can, try to get your cards to lower your interest rate and raise your limits. (A lot of companies will do it if you just call and ask.) Do all that and your credit score will be in decent shape.
7 credit cards will only hurt your score if you don’t pay them and keep high balances on them. Many reports and people are anti credit card for the simple fact that so many people don’t know how to be responsible with cards, so they go with the bad info. Great financial advisers will tell you that credit cards build your history and the longer you’ve had them and the longer you show you can use them responsibly shows good character.
It’s simple: if your not using your cards that doesn’t really help you because you need to show that you can use it and pay it back, remember your trying to build trust that you can pay it back and you’re reliable.
Cancelling your cards can in fact hurt you, but if your not using it the creditor will eventually cancel it for u.
If you want to start using the cards and being responsible and keep the balance low do this:
Just use the cards to make 1 minor purchase per card, per month like gas or food (pack of gum, chips and drink) put no more than $5-10 on the cards every month so you can easily pay it back.
It’s not good
First, no, having a lot of credit cards is *not* bad for your score. There are plenty of people with dozens of credit cards and a FICO score over 800. Note that there are actually different types of FICO scores, optimized for different purposes (e.g. credit cards, car loans, mortgages) and they are affected in slightly different ways. Having variety in your credit report counts for a small percentage of your score, but not large enough a percentage for you to stress over.
What does matter about having multiple cards is your overall account age, and your ratio of debt to available credit. As such, my general advice is to *avoid* closing accounts (and I’ll elaborate on that). If you have $2000 of debt (or you use $2000 each month, and pay in full, which is definitely best) and you have $15000 in available credit, your utilization will be good. If closing cards drops your available credit to $4000 but your debt/monthly charges remain the same (they look the same on a credit report) your score will drop *significantly*.
Finally, keeping those accounts open keeps the overall age of your portfolio higher (and continues to grow it). This is an important part of FICO. If you aren’t using a card, but it isn’t hurting anything, dust it off from time to time for some quick use* and toss it back in the sock drawer.
*Note that a credit line which hasn’t been used for a long period of time actually factors less on your score. By using it again it applies freshly, and thus keeps your score healthier. This also helps to avoid account closure due to inactivity.
If you close a card, do it because it isn’t worthwhile (e.g. if that old Orchard Bank card costs money every year, and isn’t doing anything for you, you can consider closing it out).
Simple answer: Keep the open since that make you have a low utilization (i.e. debt to available credit)
Only close any of them that have annual fees.