Do the more credit cards you have affect your credit score negatively? Regardless if they have a balance?

Question

Essentially I have like 8 Department store Credit Cards and 1 good Bank Credit Card. I hardly ever use the Department Store Credit Cards but use the bank credit card often. I get them because they tempt me with these 10% offers and I get em just to make large purchases and never use them again. I've never been late on payments and generally don't carry a balance over the next month. Do having these multiple credit cards affect or lower my credit score????

Answer 1

Yeah, you have a lot of credit available to you. If you were to max em all in one month you might find it hard to make all the payments.

Answer 2

When you close an account, you lose a portion of your credit history, and it has an effect on your debt/credit ratio. These are two major factors in calculating your credit score. The effect isn't that major, and as long as you continue to make other payments it should recover in a few months. In your case, I would first look into getting another credit card with a much lower credit rate. There are several that are offering a 0% interest and allow balance transfers. With this info at hand, contact your current credit card company and tell them to either lower your interest rate or you will cancel the card and go to another company. If they don't, then follow through on your threat. You can freeze your account so no more activity can take place, then work on paying off the debt. Once paid off, have them lower the credit limit so you are not tempted to run up a couple thousand more in debt. Lesson to learn right now....never by something on credit that you can't afford to pay off at the end of the month.

Answer 3

They don't necessarily lower your credit score but the available credit balance can affect a financial institutions decision. Here's why.

Let's say that on each of your 8 cards you have an available balance of $2,000. Plus you have an available credit line of $5,000 on your 'good bank card' of which you are carring a balance of $1,500. This gives you a total available credit amount of $19,500 which you can 'charge up' at any given moment.

If you are applying for a loan/mortgage they will consider your dept to income ratio and they will also consider your maximum possible debt to income ratio. Your current ratio may be great but when they factor in the possiblity of you running up all the cards ... your debt to income ratio could suffer greatly.

So you can see why having lots of CCs with high available balances can negatively affect a loan decision.

Hope this helps and good luck!

PS: My suggestion; close the CC's you don't plan on using and keep just one or two just for emergencies or those larger purchases you want to finance. The selection of which to keep should be based on the merchandise/services that they can buy along with the annual interest rate.

Answer 4

You can have as many cards as you like, the FICO credit scoring formula mainly considers (1) your credit -to- credit limit ratio and (2) the number of accounts with a balance. Both individually and collectively, so keep that in mind. I know people with 5-10 credit cards that have excellent credit, because they hardly use them. Most lenders know to have a good credit score you need several credit cards, so they don't hold that against you - as long as you use them wisely.

Answer 5

This should not. As long as you're not applying for multiple cards in a short period of time, which throws up a red flag for credit bureaus. In fact, closing all these cards at once can negatively impact your credit score because one of the things they look at is the percentage of your total available credit that you use every month. If you're using $1000 and your total of all you cards is $20,000, then you're using less than 10% and this is very good. BUT if you close all but one with an available credit of $1500, then you're using over 60%, which can look irresponsible. Try googleing "credit score tips" and it will come up with lots of sites with different information on improving your credit score.

Answer 6

While the bureaus won't make exact scoring procedures clear there is an affect on having multiple accounts but not negatively. As long as they are paid on time and balances are low they are not hurting you. I have however seen scores drop after closing paid off accounts. It reduces your total available limit - debt ratio which can drop your score.

Here is some additional info. Hope this helps.

Answer 7

Even though you may have no balance on the cards, it hurts your credit score since its available credit that you can tap into and get into debt.

Answer 8

They lower your credit score because even if you are not using them, you could, which would make it more difficult for you to meet your obligations. Cancel cards you never use to improve your score, and keep the others paid in full.