Want Better Credit? Here’s How Many Credit Cards You Should Aim For

One of your top priorities as an adult is to have as high a credit score as possible. Typically, those who have a score above 640 qualify for advertised loan terms while those with scores over 700 get the best rates. Let’s take a look at how applying for one or more credit cards can help you improve your score without going too far into debt.

One Card May Be Enough to Start

If you don’t have access to credit, you can improve your score just by applying for your first card. This is because credit bureaus use factors such as how much credit you have, have much credit you have used and the age of your accounts when determining your credit score. By applying for your first card, your credit age increases, your amount of available credit increases and your credit utilization will be below 30 percent by default.

How Do Additional Cards Help Improve Your Credit?

If your credit utilization is over 30 percent, obtaining additional credit may help you get under that threshold. For instance, if you are using $500 of a $1,000 available balance, you should look into getting another credit card with a balance of $500 or more. This will result in using $500 of an available $1500, which puts you closer to 30 percent.

Having Multiple Cards Gives You the Chance to Make Multiple Payments

Credit bureaus track how many payments that you have made on time. Missing one payment in a year when you have one account can be potentially damaging to your credit while missing one payment out of five or 10 each month isn’t as bad. While you should never take an additional credit card just to pad your payment stats, it can be an effective and valid way to improve your credit.

New Credit Cards Can Be Used to Consolidate Debt

Consolidating your debt with a new credit card may make it easier to pay off existing debt. This is because new cardholders may be entitled to 0 percent financing, which could reduce your payments by hundreds of dollars per month. At the very least, more of your payment goes toward the principal balance, which makes it easier to pay down in a shorter period of time. Compared to bad credit loans, you will generally pay less to consolidate your debt with a credit card while enjoying rewards points and other perks at the same time.

Is There a Specific Number to Shoot For?

In reality, there is no magic number of credit cards that you should have if you are interested in improving your credit score. For the most part, the credit agencies don’t care how many cards that you have as long as you use them responsibly. Therefore, it is possible that you could have a great credit score with one card while having a terrible score because you carry three or more cards.

If you are interested in improving your credit, it may be worthwhile to look into obtaining one or more credit cards. By doing so, you may improve your credit profile, which could make you look like less of a credit risk to lenders. As a consequence of looking like a responsible borrower, your credit score can increase by dozens or hundreds of points.