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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 question that boggles people in the field of personal finance is "How many credit cards do I need?" This question becomes much more relevant when you are considering the addition of tradelines to your credit score. Let's decode this issue by providing you with the information and direction to make sound financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

The number of credit cards you have is not only a matter of personal convenience. It also influences the credit score. Although you're aware that having a credit card can improve your credit score, you're likely uncertain about the amount you need to have.

The Pros and Cons of Owning Multiple Credit Cards

Before we go into the number of credit cards you're supposed to have we'll first take a look at the advantages and disadvantages of owning a variety of credit cards.

Advantages of Owning Multiple Credit Cards

  • If you own multiple credit cards your credit limit could be higher. A higher credit limit is great for emergency expenses or large purchases.
  • Make use of credit cards that have rewards and cashback program to cut costs when you buy things on a daily basis.
  • The ratio of your credit utilization will improve. Your credit utilization percentage refers to the amount of available credit that you are currently using. Making use of a variety of credit cards could boost your credit score by splitting your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards are a great way to increase the likelihood to overspend and go into debt.
  • It's easy to make impulse purchase that you cannot afford if you have multiple credit cards.
  • The management of multiple credit cards can require some time and energy. In particular, if the payments times are different.
  • In addition, more cards could result in high credit utilization. A high CUR can hurt your credit score.
  • Different cards have different benefits. Being too cautious with your cards can result in losing out on a variety of advantages.
  • On the other hand having too many accounts can make keeping track of payment due dates challenging. It could result in penalties for late payments and a deterioration of credit score.

Key Points to Consider When Applying for Credit Cards

  1. Diversity of Benefits: Find cards that come with advantages, such as travel rewards, cashback, or low-interest rates.
  2. Annual Fees: Make sure the card's benefits outweigh any annual charges.
  3. Interest Rates: The APR should be low. essential unless you're certain that you'll have enough money to pay off the balance every month.
  4. Credit Limit: A higher credit limit could improve your credit utilization ratio as long as you don't exceed it.

Average Number Credit Cards Should I Have

Now that we have looked at the advantages and disadvantages of owning multiple credit cards, let's discuss how many credit card you should have. What is enough? How many are enough?

Financial experts suggest having 3 to five credit cards for a complete credit profile. This offers a variety of benefits and helps improve the ratio of credit utilization.

Factors to Consider When Deciding The Number Credit Cards to Own

Several factors must be considered when deciding how many credit cards to have. These include:

  • Credit score and past history: Your credit score, history and scores will determine how many credit cards you can have. You are only eligible for credit cards with one or two points if have low credit scores or a limited credit history.
  • Budget and income: Your expenses and income will also be important. If you earn a great income and low expenses, you may manage more credit card payments than those with lower incomes and more expenses.
  • Priorities and financial goals Priorities and financial goals can determine how many credit cards you should have. If you want to improve your credit rating or earn rewards, you should consider having a variety of credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

Here are some recommended numbers of credit cards based on different scenarios:

  • For those with no credit history If you don't have a credit history, you may be eligible for one or two credit cards.
  • For those with a good credit score: If you're averaging credit score, you might have up to three credit cards.
  • for those with high credit scores: If you have excellent credit you could be the owner of at least four credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

Now that we have examined the number of credit card you should have let's consider how having multiple credit cards can affect your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

Owning multiple credit cards can have a positive effect on your credit score through a variety of ways and include:

  • Better credit utilization ratio: The fact that you have multiple credit cards can aid in improving your CUR. The spreads your balances across several cards.
  • Diversified credit mix: A diversified credit mix can help improve your credit score.

Negative Impact of Owning Multiple Credit Cards on Credit Score

The fact that you have multiple credit cards can cause damage to your credit score the following ways:

    • Higher risk of missed payments and delinquencies: Owning a lot of credit card accounts could lead to an increased chance of missing payments. There is also a chance of becoming indebted with your account.
    • More credit inquiries and new accounts Affiliation to multiple credit cards can be the cause of multiple credit inquiry as well as new accounts. Both can lower your credit score.
    • Lower average age of accounts The fact that you have multiple credit cards can help reduce the average age of your accounts. In turn, it could affect your credit score.
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