- Is there a right number of credit cards every person should have?
- Are there any “must-have” credit cards?
- Will it hurt my credit if I have too many cards?
- How does my payment history impact my credit?
- Can credit cards improve my credit score?
- Should I open more credit accounts to get access to more credit?
- Will having too many cards with zero balances affect my credit?
- How Many Credit Cards Should I Have?
Is there a right number of credit cards every person should have?
There is no cookie cutter answer here. It depends on the individual and their credit history. According to the credit reporting agency Experian, the average American has 3.1 credit cards. Some people use this as a guide, but it truly varies from person to person.
Are there any “must-have” credit cards?
Generally speaking, it’s a good idea to have at least two major credit cards. This includes Visa, MasterCard, American Express, and Discover. Whichever two cards you choose should offer some type of rewards whether it’s points to redeem for rewards, mileage, or cashback.
You want to have two different major credit cards because there may be some merchants that only take MasterCard or Visa. If you have two of the same types of cards, you may have difficulty when you’re at certain locations.
As you choose which credit cards to add to your wallet, beware of those that charge annual fees, especially if you don’t plan on using the credit card that often. You may end up spending money unnecessarily. Even if you’re earning rewards, they may not be worth it depending on the annual fee you’re paying and how often you’re using the card.
Will it hurt my credit if I have too many cards?
Every time you apply for a credit card, including those impulse purchases where you sign up for a retail credit card to get a percentage off, counts as a hard pull on your credit. If you open up several credit cards in a short amount of time it portrays you as a greater risk. This is especially true if you’re new to the credit scene.
Although new credit only accounts for 10 percent of your overall credit score, any credit inquiries will stay on your report for one year. You don’t want to open up a new credit card every few months. If you do want to open up several new accounts at once, you may want to do it within a short amount of time. This way all of the inquiries will be on your credit report at the same time, not spread out.
The number of credit cards you open, especially in a short amount of time, will impact your age of credit. The length of your credit history makes up 15 percent of your overall credit score. If you opened one credit card ten years ago, the length of your credit history would be ten years. But, if you opened another card two years ago, the length of your credit history would be cut down to 6 years. The ten years would be added to the two years and then divided by two to get a new credit history length of 6 years.
If you’re thinking of buying a car or home soon, it’s also not advised to open up a new credit card within at least six months of applying for a loan for either of those purchases. Doing so will lower your credit score by a few points because it is a hard inquiry on your credit. You don’t want your credit to be affected at all when you’re planning on making a big purchase like a car or home.