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How Many Credit Cards is Too Many?

Too many credit accounts hurting your credit score. Many people mistakenly believe that having several credit accounts will hurt your credit score. The number of accounts you have isn't the problem, it's how you manage them. If you maintain your accounts by keeping them active and keeping the credit utilization low, you are actually helping your credit.

Aged accounts

The older your accounts, the better. If you think you have too many accounts and want to close some, you need to be careful; especially when it comes to your oldest accounts. The longer the account has been open, the more it adds to your score. The credit scoring formula favors established credit; you'll receive more points if those accounts have been well maintained. That means actually using the account from time to time to keep it active. If you don't use the account and the grantor closes it due to inactivity; that could damage your score.

If you simply don't want to manage multiple credit accounts, consider closing some newer ones that don't carry as much weight.

But keep in mind, even if you personally close the account, you are reducing the amount of your available credit but keeping the same amount of debt. This negatively affects your credit utilization ration which will harm your credit score.

Keep track of balances

Credit utilization ratio plays a big factor in your credit score. Credit scoring formulas compare your balances with the credit limits on your accounts to come up with a percentage. The closer your balances are to your limits, the higher the percentage and the more your credit score suffers. Even if you have one account that has no balance but another that is maxed out, the formula considers all balances combined and compares them will all available limits. You will do the most for your score by keeping all revolving account balances between 10% and 30% of their available limits.

That may be difficult for people who are accustomed to swiping a credit card for nearly all transactions. This is where multiple cards can come in handy. If you have several revolving accounts among which to spread out your debts, you will be able to keep your credit utilization lower, thus helping your score. Just be careful. It will take better organization to responsibly manage multiple accounts.