Can Too Many Credit Cards Hurt My Score?
June 11th, 2009, Written By: Kerri Randall
Opening a store credit card can be a tempting offer since it usually comes with a discount on your first purchase and promises of future coupons and deals. A new major credit card can be appealing with its offer of a no-fee balance transfer. But if you have so many cards that it takes you a couple minutes at the cashier to find and decide on the right one to use, you may want to take a look at your credit report.
Manage Your Credit Cards
Too many credit cards are not necessarily bad for your score, but how you manage them is particularly important. Initially, if a creditor sees that you have many open lines of credit, it can indicate that you are a risk, especially if most of your cards are not from any of the bigwigs like MasterCard and Visa. It may appear that you are irresponsible with your finances or perhaps opening more accounts in an attempt to manage older ones that have gone awry.
As with any credit, if you pay on time and keep your balances low, a lot of credit cards may not hurt you. Even if the accounts look questionable, your score may only lower by a few points. Be careful not to use up your available credit with new purchases, even if you do pay in full and on time. Your highest balance is reported to the credit bureaus, without the tag line of “paid in full,” and this can affect your score.
Keep Credit Balances Low
Store credit cards can put you in a lot of trouble if you don’t stay on top of them. They usually come with high interest rates, so once you miss a payment, the negative impact they will have on your finances and your credit score will not be worth any discounts you’re getting. You also don’t want to open too many in a short time frame, as you’ll appear to be erratic with your finances.
If you’re wise about your credit card decisions and resist the temptation of a new card just to get 10% off, a number of open accounts can actually have a positive impact on your credit score if you manage them well and keep them open long enough. A long history of well-managed accounts works to your benefit. Open new credit for a valid reason that will benefit your financial future, not simply offer a quick discount of a few dollars.
Categories: Credit Score Information
