Is there an ideal number of credit cards to have?

Last Updated: May 16, 2013 09:03PM UTC

Though having a wallet full of credit cards is often perceived as a bad thing, it’s not unlike having high credit lines: Provided that your balances are low, having several active cards helps your credit score because it lowers your utilization ratio.

Let’s suppose you owe $1,000 total on credit cards, and you’ve got two active credit card accounts, each with a $1,000 limit. In that scenario, you’re 50% utilized in your credit, which is generally considered too high. But if you add one more credit card with a $1,000 limit into that mix, you’re only 30% utilized, an amount viewed favorably by most lenders.

However, time is an important determinant of whether having many credit cards is a plus, or negative. Credit cards you’ve had the longest help your credit the most because they speak to a stable history-- but applying for many credit cards at once will negatively impact your credit.

Instead of seeking out new credit, keep your highest credit line and oldest accounts open and active by using them, even if for a small purchase or two, at least once a year. If you don’t, the issuer can close your account, and you’ll lose the benefit of that open credit line.
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