How Many Credit Cards Should Be Open?
We often get this question from our clients: How many credit cards should I have? or How many credit cards should I keep open? If Personal Financial Fitness is part of your resolution for the new year, getting a better credit score should be part of it.
The Types of Credit Used accounts for 10% of the FICO score. Generally, people with a longer credit history will have a broad mix of account types on their credit report including mortgage, credit cards, auto loans, lines of credit, retail and fuel accounts that are both open and closed.
For consumers with established credit, having 1 to 4 open revolving accounts is recommended for better credit scores. The FICO score considers people with no credit cards, OR more than eight cards, a higher credit risk.
WHAT TO DO
Once they are paid off, keep your revolving accounts active as credit building tools by using them at least twice a year for a small purchase of something you need and then pay the bill in full when it arrives the next month. If you have more than four credit cards, DO NOT randomly close them all without analyzing their impact on your overall credit rating by their longevity, credit limit and last activity.
You can check your own FICO scores and it won’t count against you. You can also get your Credit Report Analysis with strategies for each of the five parts of your credit rating, including detailed credit cards analysis, by contacting us today.