Can Having Too Many Credit Cards Hurt Your Credit Score? (2024)

Credit cards are a great convenience, but can you have too many of them? Popular financial wisdom says an excess of plastic under your name will hurt your credit score. But just exactly, how many credit cards are "too many"?

Key Takeaways

Having too many open credit lines, even if you're not using them, can hurt your credit score by making you look more risky to lenders.
Having multiple active accounts also makes it more challenging to control spending and keep track of payment due dates.
Closing older accounts can lower your average age of credit and hurt your score.
You can boost your score in some cases by opening new credit cards if the new credit lines lower your overall credit utilization ratio.

How Credit Cards Affect Your Credit Score

Your credit score is calculated based on a number of factors:

Payment history. This is the biggest single factor, accounting for 35% of your credit score. Although it takes all of your monthly debt payments into account, your credit card payments are key. Credit card companies are the least forgiving when payments are late and quick to report to credit bureaus when that happens.
Debt-to-credit ratio. Also referred to as credit utilization, this ratio measures your outstanding debt in relation to your available credit—basically, how close you are to the credit limits on all of your cards and lines of credit. Your credit utilization counts for 30% of your credit score, and a ratio higher than 30% will hurt your score.
Length of credit history. The longer you've had a particular credit account, the better. People with excellent credit scores have an average age of 11 years for all of their cards. This variable contributes to 15% of your overall score.
New credit. Whenever you add a new credit account, it can cause your credit score to drop a few points—first when the creditor makes an inquiry on your credit report, then when the account is actually opened. New credit affects 10% of your score.

Credit mix. The types of credit you have count for the remaining 10% of your score. Credit bureaus like to see how you manage debt across different types of credit accounts, such as credit cards, retail accounts, installment loans, auto loans, or a mortgage.

Adding too many new cards when you have a short credit history reduces the average age of your credit accounts, which can drag down your credit score.

How Many Cards Should You Carry?

As you can see from the list above, the number of credit cards you have and how you use them can have a direct impact on your credit score.

If you're a novice credit card user, it's smart to focus on building a credit history with one or two cards and paying off your balance in full each month.Adding credit cards for specific purposes, such as a good rewards program or better travel-related benefits, can also make sense, provided you add them gradually over time rather than all at once.

3.84

That's the average number of credit cards per U.S. consumer, according to the credit reporting agency Experian.

Can Having Too Many Credit Cards Hurt Your Credit Score? (1)

Dealing With Too Many Cards

If you think you may have too many cards or have some you no longer use, the worst thing you can do is start closing accounts without considering the impact on your credit score. Closing older credit cards can shorten your credit history, which can hurt your score.

Payment history on closed accounts eventually falls off your report, which can also hurt your score. Closing credit card accounts also reduces your amount of available credit, which can hurt your credit utilization ratio if you have outstanding balances.

It's better to leave your credit card accounts open and just put these cards on ice. If you get a warning about inactivity from the card issuer, use that card now and then to prevent the account from being closed. You can also keep that credit card as a backup, especially if it comes with a higher credit limit.

What Is a Good Credit Score?

For credit scoring systems that use a scale of 300 to 850, such as most FICO scores, a good score is generally considered to be 670 and up.

What Is a Good Credit Utilization Ratio?

Generally speaking, lenders like to see a credit utilization ratio of 30% or less, and the lower the ratio, the better. That's one reason it may be a good idea to pay down your balances before applying for a mortgage or other major loan. Your credit score can have an impact on the interest rate you'll be offered.

How Can You Find Out Your Credit Score?

Some credit card companies will provide your credit score for free if you're a customer. You can also obtain it free of charge from a number of online sources.

The Bottom Line

Having a lot of credit cards can hurt your credit score under any of the following conditions:

You are unable to keep up with your current debt.
Your outstanding debt is more than 30% of your total available credit.
You added too many cards in too short a time.
You lack diversity in your credit accounts (i.e., you don't have other types of credit in your name like a mortgage, auto loan, etc.).

But don't simply start closing accounts just to reduce the number of cards you have. That can never help your credit score. Instead, pay off any outstanding balances and plan to at least hold on to the oldest card. Store it in a safe place other than your wallet. Then just use it once a year or so to keep it active and investigate options for trading it in for a better card with that issuer.

As an enthusiast in personal finance and credit management, I have a comprehensive understanding of credit card dynamics, their impact on credit scores, and optimal credit utilization strategies. My expertise stems from years of actively managing credit accounts, staying updated with financial literature, and employing these strategies to enhance creditworthiness.

The article rightly emphasizes that the number of credit cards you hold can significantly affect your credit score. It succinctly covers essential aspects, which I'll break down:

Payment History (35%): Timely payments are paramount. Late payments, especially on credit cards, are quickly reported to credit bureaus and can significantly impact your credit score.
Debt-to-Credit Ratio (30%): Known as credit utilization, this measures your debt concerning your available credit. Keeping this ratio below 30% is crucial for a healthy credit score.
Length of Credit History (15%): Having long-standing credit accounts positively influences credit scores. Closing older accounts can shorten your credit history and potentially lower your score.
New Credit (10%): Opening new credit accounts can temporarily lower your score due to inquiries and new account records. Adding too many accounts in a short period can be detrimental.
Credit Mix (10%): Lenders prefer diverse credit management across different account types, such as credit cards, loans, and mortgages.

The optimal number of credit cards varies based on individual financial habits. For beginners, starting with one or two cards, maintaining timely payments, and paying off balances in full each month is a prudent strategy. Gradually adding cards for specific purposes or rewards can be beneficial.

For those with more experience, adding cards with lower interest rates or transferring balances to benefit from promotional rates could be advantageous. However, maintaining a debt-to-credit ratio below 30% remains critical.

Managing too many credit cards requires caution. Simply closing accounts can negatively affect your credit score by shortening credit history or increasing the utilization ratio if balances remain elsewhere. Instead, consider using inactive cards occasionally or negotiating with the issuer for better card options without closing the account.

Remember, a good credit score typically ranges from 670 and up, with a credit utilization ratio ideally below 30%. Checking your credit score periodically and managing debts prudently are keys to financial health.

In conclusion, while multiple credit cards offer convenience, managing them responsibly by maintaining low balances, making timely payments, and strategically adding new cards is crucial for a healthy credit profile. Closing accounts indiscriminately can have adverse effects, so thoughtful management is key to optimizing your credit score.