How Many Credit Cards Should I Have?

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You’re thinking of applying for a credit card but wondering if you already have too many. Or maybe you have the opposite problem – you haven’t applied for a credit card and want to know what is a safe number to have.

The average American who has opened a credit card has between 2-4 credit cards in their wallet.

But what’s even more important than the number of cards you have is how you manage the cards you do have.  

Does the Number of Credit Cards You Have Impact Credit Rating? 

The number of credit cards you have won’t make or break your credit score. 

Here’s a breakdown of how credit cards impact your credit rating: 

Payment History

Payment history accounts for 35 percent of your credit score. If you carry balances on several credit cards and forget to pay on time or can’t keep up with your monthly payments, your credit score could take a hit. The good news is the credit card issuer won’t report the account as past due until it’s been delinquent for 30 days or more.   

Amounts Owed

Your credit utilization ratio, or the amount of your credit limit that’s in use, accounts for 30 percent of your score. If your total credit limit between 2 cards is $1,000 and you owe $250, your credit utilization is 25 percent. The lower this percentage, the better – a credit utilization ratio below 30 percent is ideal

Length of Credit History

The more established your credit card accounts, the better. Also, be mindful that closing a credit card account could negatively affect your credit rating if it causes your credit utilization to take a hit. 

Credit Mix

Creditors prefer consumers with a healthy mix of revolving (i.e. credit cards) and installment (i.e. personal loans, student loans, auto loans) debt. If you don’t yet have a credit card, opening one could help your credit mix and improve your score. 

New Credit

Each credit card application you submit generates a hard inquiry, which can drop your score by a few points. Several new applications for credit in a short period could raise suspicions with creditors. 

How Many Credit Cards Is Too Many? 

Hopefully you are not figuring out you have too many cards when you can no longer keep up with your credit card payments.

Before applying for a credit card, think what about the section above and how it will impact your financial health. You likely only need a couple lines of credit to help you build credit, be used as a safety net in an emergency, or even a way to earn rewards at your favorite stores. 

It’s important to not arbitrarily apply for lines of credit just because they are available to you. Like anything else in life, the more you have of something, the more you have to manage, and in the case of credit cards, the more debt you can put yourself in. 

Grow Your Credit Score Not Your Debt 

Instead of focusing on a magic number, redirect your attention on improving and maintaining your credit health. 

A few tips to help maintain and grow your credit rating: 

  • Make timely payments on all your debt obligations each month. 
  • Keep your credit card balances low. 
  • Don’t close old credit card accounts. 
  • Maintain a healthy mix of revolving and installment debt accounts.
  • Only apply for credit as needed. 

Maybe your credit rating isn’t up to par, and you want to jumpstart your journey toward a higher score? 

Consider the Credit Builder Loan from MoneyLion. 

To qualify, you need a checking account that’s in good standing and is at least 60 days old. Your account’s activity should reflect a steady stream of income from things like employment, government benefits, child support, or alimony. This loan will give you up to $1,000 and help you start building your credit rating. 

Here’s how to get started: 

  • Download the MoneyLion app to your mobile device.
  • Customize your profile. 
  • Connect your checking account. 
  • Apply for a Credit Builder Loan. 

The Credit Builder Plus membership is only $19.99 per month and includes credit reporting to all three credit bureaus, credit tracking in the MoneyLion app, weekly score refreshes, access to 0% APR Instacash advances, Lion’s Share rewards, and more.

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