Your credit history is shown by your credit score, which is just a basic numerical representation. A better credit score indicates lesser lending risks; therefore, prospective lenders will look for one before granting credit. Maintaining good credit ratings while having multiple credit cards is a common concern. The answer is simple: you can have multiple credit cards as long as you secure your credit score. But if you have many credit cards, especially new ones, your credit score for credit cards may decrease since it lowers the average age of your credit accounts.

Affect Your Credit Score

How Do They Calculate Your Credit Card’s Credit Score?

Five elements are mainly in use to calculate credit ratings; while there are multiple factors to consider, some hold more weight than others.

Payment History

The largest scoring element, with a weighted average of around 35%, is the history of your payments. When evaluating your credit payments, which result from your debts, credit cards become the primary factor that stands out. When you have to make monthly payments for each of your credit cards, having many cards might be a headache. Additionally, missing payments might result in reporting to the credit agencies, which can eventually reduce your credit score.

Average Age of the Credit Card

The average age of the credit card might be a consideration if you have several new credit cards, as this aspect contributes 15% to your credit score. Individuals with extended credit card histories- 11 or 25 years- have good credit scores. Your credit score can be lowered by having a short credit card history, and adding new cards can make your average card age shorter.

Credit Types

Your credit card score is influenced by your credit type to the tune of 10%. Credit reporting agencies frequently look for a varied credit portfolio that includes several types of credit cards, mortgages, Installments loans, and retail accounts. Maintaining the same credit portfolio with only a few credit cards might also impact the credit ratings.

Debt to Credit Ratio

This calculation, which is also known as credit utilization, compares the amount owed on credit cards to the amount of credit that is available. If the ratio surpasses the 30% weighted limit, which holds a weightage of 30%, it will impact your scores. You can enhance your credit score available to the outstanding debt by using several credit cards, but you shouldn’t go over the 30% limit.

New Credit Account

Opening a new account will ultimately cause your credit score to decline. An excessive number of credit accounts will result in an excessive number of queries, which will eventually alert the credit agencies to an elevated credit risk. It’s important to avoid opening too many credit cards quickly because doing so lowers your credit score by 10%.

Also Read :- Top Reasons for Credit Card Rejection

Conclusion

If you want to have several credit cards, you shouldn’t get them all at once because that will lower your average credit card age and your credit score. If you already have several cards, it’s best to avoid closing the accounts because doing so will boost your overall credit availability, which will raise your credit score. Instead, choose to use one or two for a month so that you can monitor your payments, often check your credit score, and continue to increase the credit available in your debt-to-credit ratio.

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