Should I strive for a high credit limit? How many credit cards should I have?

Question

I just figure the more credit the better. Does a higher credit limit increase your credit score? I don't plan on ever using all of it, but I want it to be available to me.

And if my credit limit is higher, doesn't it make the amount I owe seem smaller, so my credit score will increase right?

Answer 1

Let's clear up a few things. True...mass pulls can affect your credit scores by a few points. Any pull on your credit will go away in 90 days.

Also, the guy that said credit is made up of a certain percentages is on the right track but is off. The credit bureau doesn't look at your debt to income ratio. The bureau's don't know your income so that is a complete falsehood. Revolving debt to limit ratio will affect your score however. Maybe that is what he meant.

To the "Cash is King" guy. Good luck ever buying anything you don't have cash for. To buy a house you need credit unless you go FHA. FHA will use alternative trades like utility bills and rent.

I have so many clients that walk into my office trying to obtain financing for a home and get denied because they have one or two collections on utilities and have a bad score and refuse to open an account to help boost their scores. I guess cash only people don't deserve a house.

Having a credit card is a great way to boost scores. Just treat them good...no lates and keep the balance under 50%....33% is optimal. A lot of lenders look for at least 3 tradelines. I would open 1 or 2 credit cards or 1 or 2 installment loans. Have 3 total.

Answer 2

Credit score is made up of the following items;

1. Payment history 35%
2. Time in bureau 15%
3. New credit 10%
4. Type of credit used 10%
5. Debt to income ratio 30%

As you can see items 1,2&5 are the most important as far as score is concerned. But you need to have a good score and a good profile. To achive this you will need at least 3 revolving accounts (credit cards) and 2 installment accounts (auto, home, personal or boats) all with good long pay historys and low balances on your credit cards.

This mix of credit will give you the best score/profile.

Your credit limit has nothing to do with your score, it's how much of it you have used that is important. Keep your credit card balances below 30% of your limit at all times. Pay them in full whenever you can.

Answer 3

High credit limits, are not necessarily a good way to increase your credits score. More credit accounts can improve your score as long as you maintain a good income to credit ratio. Reducing your balances while maintaining active credit use makes you more appealing to prospective lenders and can help improve your credit score. No matter how much available credit you have, it can't beat cash in the bank. Setting aside a fixed amount each month will guarantee interest-free funds in the case of emergency while helping you develop financial discipline.

Answer 4

No. The more cards you have does not make it better. You do want high limits on the card/cards you have.

But keep your debt on the cards under 30%. You want at least 2 good trade lines so I would suggest 2 credit cards unless you have another line of credit already like a financed car or something.

Also you can request your cell phone company report to the credit bureau, that would be something you could have on your credit instead of another credit card you don't need.

Answer 5

It's the opposite. The more open accounts you have the less likely it is you'll get credit. Mortgage companies and car loans look at this sort of thing. That effects your interest rate.

The best thing is to have no credit cards. Cash is king.

The reality is the average American has 35,000 dollars in credit card debt. Why? Because they have too many cards with high limits.

If you're going to have them then have one. This is the age of identity theft and credit fraud. Protect yourself, your credit rating, and your finances by having one card with a low limit.

A higher credit limit may make appear that what you owe is smaller, but it isn't.

Instead of owing money to credit card companies, just imagine how much money you'd have if you invested what you would pay to the credit card into a good mutual fund or money market account.

That's the way to financial succeess. Not credit card debt.

Answer 6

The more credit you have available, the easier it is to get in trouble. That doesn't mean that your credit SCORE is higher - in fact, having a lot of credit cards might DECREASE your score, is not likely to increase it.

Answer 7

No no. the more credit cards you have the lower your score will be. I am 99% sure that everytime some company checks your credit report you lose points. And every time you open a credit card, they look at your report.

The smart way is to get one credit card that gives you cashback (shop around) some give you more cashback on gas and grocceries. NO Annual fees and very low APR. As long as you pay atleast a minimum payment on time, your credit will get better.

Answer 8

I personally only keep 2 cards, a gas card and one for everything else. Having too many credit cards does lower your credit score as you run the risk of overspending, having high balances, or unused accounts that you leave lying around isn't good, as well as more liability should there be fraudulent activities.

Answer 9

One Credit card....use only in case of an emergency!! pay cash as often as you can.... the interest rates on Credit Cards is a waste of hard earned money!!!

Answer 10

Only as many as you need, preferrably one, Too many and you leave yourself open to credit fraud or you get a little crazy and ruin your credit. We got one that gives us cash back for gas purchases, which makes buying gas less painful.