Optimum number of credit cards?

Question

I have 7 credit cards, and am in the process of paying them off and closing some of them. What is the "optimum number" of cards to have in order to have the best FICO score for future use? Is there such a thing? I know that the "balance in proportion to the limit" is one of the big factors in figuring FICO, but if they're all at zero balance, any guidance on what would be best?

(Over the past few years I've managed to change my habits to where I'm pretty much on a "cash-only" basis, so paying off the existing balances is step 2 in cleaning up my credit.)

Thank you for all the great info and for the reminder about how long a card has been open - that will help me decide which ones to close as they zero out.

Answer 1

You should keep either one or two of your major credit cards, not department store credit cards. Credit scores are normally based on 5 factors - payment history, outstanding credit balances, credit history, type of credit, and credit inquiries.

Payment history - if you can't payoff the entire balance, always pay more than the minimum payment due, even if its only $1 more.

Credit Balance - you're right regarding the "balance in proportion to the limit". You should try to keep balances below 30% of the credit line.

Credit history - cards you've had for a longer time will reflect better on your credit score, as oppossed to cards you've only had for a short time.

Type of credit - different types of credit (car loan, mortgage, credit cards) are usually better than just one type. But this isn't a high weighing factor when determining your credit score. Don't worry too much about it if you only have credit cards.

Inquiries - too many inquires in a 6-month period can negatively impact your credit score

As an FYI - credit scores above 620 are typically considered "prime" or less risky. People with credit scores less than 620 are usually considered a greater risk and will most likely not be approved for credit, or approved at a much higher interest rate.

Along the same lines.....even if all of your credit cards are at a $0 balance, you still have the opportunity to "max" them out if you decide to. This is something that banks/credit unions usually review if you're applying for a loan. Because if you "max" out all of your cards how will you repay their loan.

Hope this helps.

Answer 2

I think 2 credit cards would be good. The first one should have a good rewards program. It would be used for day to day purchases and be paid off in full every month.

The second would have a low interest rate and would be used only for big emergency purchases that you would have to pay back over time.

Answer 3

No, you must no longer input it. Yes, this can be a rip-off. If they weren't going to cost you any cash, then they could no longer want your bank card quantity. If they require a bank card quantity, that suggests that you're going to need to pay a few cash, for some thing.

Answer 4

well, in terms of collecting interest instead of paying it, the optimum number of cards is zero. Problem is, you'll never see 20% gains on your savings account...but that's what you pay on the plastic...

Answer 5

Good job in getting this done!

I am proud of you, it is not easy.

Get one card and pay it off in FULL every month.

Good Luck!