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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 issues that confuse people when it comes to personal finance is "How much credit card do I require?" This question becomes especially pertinent when are considering the addition of tradelines to your credit score. Let's clear up this issue and provide you with the knowledge as well as a roadmap to help you make smart financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

The number of credit cards you carry is not just an issue of personal preference. It also affects your credit score. While you know that having the right credit card can boost your credit score, you're probably uncertain about the amount you need to have.

The Pros and Cons of Owning Multiple Credit Cards

Before we discuss the number of credit cards you should have we'll first examine the advantages and disadvantages of owning multiple credit cards.

Advantages of Owning Multiple Credit Cards

  • If you're using multiple credit cards your credit limit might be greater. A credit limit of high amount is helpful for emergency expenses or large purchases.
  • Use credit cards that have rewards or cashback rewards to save some money on things daily.
  • Your ratio of credit utilization is likely to increase. Your credit utilization ratio is related to the amount of credit available that you currently use. Making use of a variety of credit cards could increase your credit score through dividing your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards could make it more likely to spend too much and end up in debt.
  • It's easy, and often unplanned, to make purchases that aren't affordable when you have several credit cards.
  • Making multiple payments with credit cards can require more time and effort. More so if the payment schedules differ.
  • A lot of cards can result in the utilization of credit to be high. A high CUR could harm your credit score.
  • Different cards have different benefits. Having too few cards means not gaining the many advantages.
  • On the flip side it is possible that having too many cards can make keeping track of payments due dates challenging. It can result to overdue fees and damaged credit score.

Key Points to Consider When Applying for Credit Cards

  1. Different Benefits: Find cards with various perks, such as travel rewards, cashback, or low-interest rates.
  2. Annual Fees: You must ensure the card's rewards outweigh the annual fee.
  3. Interest Rates A low APR is essential unless that you'll pay the balance every month.
  4. Credit Limit: A higher credit limit can boost your credit utilization ratio as long as you don't reach the maximum limit.

Average Number Credit Cards Should I Have

Now that we have looked at the benefits and disadvantages of owning multiple credit cards let's explore the number of credit cards you should be carrying. What is enough? How many are sufficient?

Financial experts suggest having 3 to 5 credit card accounts to ensure a well-rounded credit profile. This gives you a variety of benefits and can also help with the ratio of credit utilization.

Factors to Consider When Deciding The Number Credit Cards to Own

Many factors need to be considered when deciding on the number of credit cards to own. These factors include:

  • Credit score and history Your credit scores and histories will affect how many credit cards you can have. You are only eligible to apply for one or more credit cards if you have an unsatisfactory credit score or a low credit history.
  • Income and expenses: Your income and expenses can be important. If you have a high income and low expenses, you may have more credit cards than someone with a lower income and more expenses.
  • Priorities and goals for your financial life Your financial goals and priorities will influence the number of credit cards you should possess. If you're looking for ways 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 on different scenarios:

  • For people with no credit history: If you're not creditworthy, you might qualify for one or two credit cards.
  • For people having average credit scores If you have an average credit score you may be able to have three or more credit cards.
  • For those with outstanding credit scores: If you have excellent credit scores you can have at least four credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

Now that we've examined the number of credit cards you're required to have let's examine how applying multiple credit cards affects your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

Multiple credit card accounts can have a positive impact on your credit score in several ways that include:

  • Increased credit utilization ratio Multiple credit cards can aid 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

Owning multiple credit cards can impact your credit score these ways:

    • Increased risk of missing payments and delinquencies: Owning a lot of credit card accounts could lead to a higher risk of missing payments. Also, there is a chance of becoming delinquent on your accounts.
    • New credit inquiries and increased credit accounts Application for multiple credit cards can be the cause of multiple credit inquiry as well as new accounts. Both of these could lower your credit score.
    • Lower average age of your account Multiple credit cards can reduce the age average of your accounts. As a result, it can lower your credit score.
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