There is a common myth that having many credit cards open at the same time hurts your credit score. Contrary to this belief, no, you can’t have too many credit cards to the point that it would affect your score. You certainly can mismanage your credit, but simply having the credit available, even across dozens of cards, will not hurt your score!
Credit Score Components
The five factors that make up your credit score are (1) payment history, (2) utilization rate, (3) length of credit history, (4) credit mix, and (5) new credit. No where is the number of credit cards itself considered.
For a detailed breakdown of your credit score components, be sure to check out this article!
Holding onto many credit cards will not necessarily change any of the important factors. Having 1,000 credit cards with a total credit limit of $100,000 and having 10 credit cards with a total limit of $100,000 will have the same impact on your credit score, all else equal.
Having More Credit Helps Your Utilization Rate
Opening many credit cards over time can actually have some significant benefits. One of the biggest benefits is being able to easily increase your available credit.
Remember utilization rate? This is the total amount of credit that you have available compared to what you owe. It measures how much of your credit is in use in a given month. Lenders like to see low utilization rates, since it suggests that you are a less risky borrower.
When you increase your amount of available credit, your utilization rate drops. This is a good thing! Closing older cards because you have “too many” will increase your utilization rate by decreasing the amount of available credit that you have. That will likely ding your score.
Opening New Cards Gives Access to Promotional Introductory Offers
In addition to expanding your available credit, by opening many cards you can typically collect some substantial introductory bonuses. I was able to pay for two round trip tickets to the Caribbean using the introductory bonus points on a credit card. There are tons of these offers out there!
In other words, while you collect cards to expand your credit limit, you could be reaping serious benefits! Can you really have too much free stuff?
The only drawback to opening new cards is that your credit score will temporarily get dinged for opening new credit. It will also lower your average length of credit history. But both of these areas fix themselves with passing time and can be offset by your lowered credit utilization rate. Otherwise, for your score, there is no drawback to having more credit cards.
Closing Old Cards Hurts Your Credit Score
Closing old cards will almost always hurt your credit score. By closing the card, you are probably reducing the average age of your credit accounts. You also are reducing your amount of available credit. Both negatively impact your score.
The only time it makes sense to close a credit card is if the card has a large annual fee and if removing it will not drastically change your average length of credit history and credit limit. Carefully consider how your credit score might be affected before closing any cards.
Managing Your Credit Cards
Hanging onto your oldest credit cards is an easy way to increase your credit score. However, if you do not use one of your cards frequently, be sure to use it at least once every few months to avoid having it closed. Card companies might close a card if it is not being used!
You can consider getting rid of cards with hefty annual fees if the benefits to your score and rewards points are not worth it anymore. That said, under no circumstances should you close a card that does not have a fee. You can look at cards without fees as a free way to boost your score over time. Just make sure to use them every few months to avoid having it suddenly closed.
No matter how many cards you have, always make sure to pay off each of them on time and never miss minimum payments. The number of cards does not change the amount of responsibility you have. A missed payment for even just one card can critically lower your credit score.
Also be careful about opening new cards too quickly. Hard inquiries into your credit history can ding your score significantly, and having a bunch of them stacked up can make a large impact. Consistently spacing out credit applications can be a good strategy to accumulating credit cards and their rewards without devastating your score.
As a rule of thumb, try to limit hard inquiries to just a handful per year if you need your score to be in tip top shape. And do not have a bunch of hard inquiries in the months before you need to take out a big loan. Having too many inquiries can deter lenders from approving you for important loans like low-interest mortgages since you will be considered a riskier borrower.
Always manage your credit responsibly. But do not worry about the number of credit cards that you have!
Conclusion
So can you have too many? No, you can’t have too many credit cards.
Having many credit cards will not adversely affect your credit score. The number of cards itself is not considered when calculating your credit score.
That said, make sure to have a concrete plan when applying for new credit. And make sure to keep track of your current cards to keep your credit score as high as possible. Misusing credit can lead to all sorts of problems. Thankfully, hanging onto a bunch of different cards does not.
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