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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 questions that stumps people in their personal finances is "How much credit card do I require?" This question becomes much more relevant when you are thinking about adding tradelines to your credit score. Let's clear up this issue and provide you with the knowledge and guidance to make shrewd financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

The number of credit or debit cards you use is not only a matter of personal convenience. It also influences the credit score. While you're aware that a credit line can help your credit score, you're probably puzzled as to how many you should have.

The Pros and Cons of Owning Multiple Credit Cards

Before we get into the number of credit card you should own, let's first look at the benefits and downsides of having several credit cards.

Advantages of Owning Multiple Credit Cards

  • If you're a credit card holder with multiple cards and credit limits, they could be greater. A high credit limit is helpful for emergency expenses or large purchases.
  • Utilize credit cards that offer rewards and cashback offers to save you money when you buy items on a regular basis.
  • Your credit utilization ratio will improve. Your credit utilization rate refers to the amount of available credit that you currently use. The use of multiple credit cards can improve your credit score by dividing your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards can make you 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 a lot of credit cards.
  • The management of multiple credit cards could take more time and effort. This is especially true if payment timetables change.
  • More cards could lead to an increase in credit utilization. A high CUR could harm your credit score.
  • Different cards come with different perks. Having too few cards means you aren't getting the full benefits.
  • On the other hand, having too many cards can make the task of calculating payment due dates challenging. It can lead to 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 provide a variety of advantages, such as travel rewards, cashback or low-interest rates.
  2. Annual Fees: Be sure that the card's benefits outweigh the annual fee.
  3. Interest Rates Lower APRs are vital unless you're sure that you'll pay the balance each month.
  4. Credit Limit: A higher credit limit can improve your credit utilization ratio, so long as that you don't max it out.

Average Number Credit Cards Should I Have

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

Financial experts recommend having between 3 and 5 credit cards for an overall credit profile. This can offer a variety advantages and improves the credit utilization ratio.

Factors to Consider When Deciding The Number Credit Cards to Own

There are a variety of factors to consider when deciding how many credit cards you have. These factors include:

  • The credit score and the history Your credit score and history will determine how many credit cards you'll need. You're only eligible on one or two credit lines if have poor credit scores or a short credit history.
  • Earnings and expenses: Your expenses and income will also be vital. If you're blessed with a higher income and low expenses, you could manage more credit cards than those with lower incomes and more expenses.
  • Financial goals and priorities: Your goals in terms of finances and priorities will also influence the number of credit-cards you can own. If you're looking to improve the credit score of your business or earn rewards think about owning many credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

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

  • for those with no credit history If you are not able to establish credit, you may be eligible for one or two credit cards.
  • For those with a credit score of average If you have an average credit score you may have between two and three credit cards.
  • For those with outstanding credit scores: If you have excellent credit scores you could have four or more credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

Now that we've examined how many credit cards you're supposed to have Let's see how applying multiple credit cards can affect your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

Multiple credit card accounts can positively impact your credit score in a variety of ways which include:

  • Increased credit utilization ratio: Having multiple credit cards could help improve your CUR. The spreads your balances over 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

Multiple credit cards may affect your credit score in the following ways:

    • Higher risk of late payments and delinquencies: having a large number of credit card accounts could lead to an increased risk of avoiding payments. There is also the possibility of becoming indebted with your account.
    • New credit inquiries and increased credit accounts When you apply for multiple credit cards can produce multiple credit requests and new accounts. Both can lower your credit score.
    • Lower average age of accounts: Owning multiple credit cards can help lower the age average of your accounts. As a result, it could lower your credit score.
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