Can Too Many Credit Cards Hurt Your Credit Score?

You're checking out at your favorite department store when the cashier asks if you'd like to apply for the store's credit card. Doing so will save you 10 percent on your purchase. Should you fill out the application? Or will having too many credit cards in your wallet ding your three-digit FICO credit score?

According to, there is no "golden number" of credit cards that will hurt or help your credit score. What matters most is how you use those cards — namely, paying your bills on time. Still, there are a few important things to remember when you have multiple credit cards.

Inquiries ding your credit score

Whenever you apply for a new credit card, your FICO score will fall slightly. The creditor behind the plastic will order a copy of your credit report from one of the three national credit bureaus: Experian, Equifax, or TransUnion. This inquiry will then show up on your credit reports.

An inquiry will temporarily drop your credit score because whenever you apply for new credit, there is a risk that you will borrow more money than you can afford to pay back. How much your score will drop varies, but myFICO says that for most people, a single inquiry will result in a drop of five points or less.

The drop in your score might be steeper, however, if you apply for several credit cards in a short period of time. There's a statistical reason for this: myFICO says that people who have six or more hard inquiries on their credit reports — inquiries made by a lender with whom you've applied for credit — are up to eight times more likely to declare bankruptcy than consumers who have no inquiries. Hard inquiries remain on your credit reports for 24 months before falling off.

The smart move is to apply for new credit if you need it and plan to use it. Don't apply for new credit cards just to get a store discount you'll use a few times.

Use your cards wisely

What's more important than the number of cards you have is how you use them. Paying your credit card bill late will send your FICO score tumbling, usually by 100 points or more. Your creditor will report a payment as officially late to the three credit bureaus if you're more than 30 days past due. That shouldn't be an excuse to regularly miss your due date (especially because most cards will charge you a late fee if you're even one day late), but it does mean you don't need to panic if you're only a few days behind.

Making credit card payments on time is one of the surest ways to boost your credit score. Use your credit cards sensibly throughout the month, and whenever possible, pay the balance in full by the due date. That way, you won't have to pay interest. If you can't pay off the entire balance, at least pay more than the minimum. You'll still pay interest, but it'll be much less than if you only made the minimum monthly payments.

Keep unused credit cards open

You might think that closing a credit card account you never use will help your credit score. It won't. Actually, it can cause your score to fall.

It all comes down to your credit utilization ratio. This measures how much available credit you are using by dividing your total credit card balances by your total credit card limits. For example, if you have $12,000 of available credit and a balance of $3,000, your credit utilization ratio is 25 percent. Credit utilization accounts for approximately 30 percent of your credit score, and many experts agree that the ratio should not exceed 30 percent. The lower, the better.

Using more than 30 percent of your available credit will hurt your credit score. By closing a card, you're removing that line of available credit — therefore increasing your credit utilization ratio.

Say you have $30,000 of available credit and you owe $10,000 on your cards. If you close a credit card with a $10,000 credit limit, you'll lower your total available credit to $20,000. That will bump your credit utilization ratio from 33 percent to 50 percent. That doesn't look good on your credit reports.

Don't close a credit card just because you think you have too many cards. Even if you never use it, you might inadvertently hurt your credit score.

Older credit is better for your score

When it comes to credit cards, the longer you've had them, the better. The length of your credit history accounts for 15 percent of your FICO score. The older your credit history — paired with a history of making on-time payments — the better your credit score will be.

If you apply for several new credit cards at once, you'll lower the overall average age of your credit accounts. That could have a slight downward pull on your credit score.

Again, though, what matters most is not how many cards you have, but whether you pay them on time each month. Don't overanalyze the number of cards you are carrying. Instead, concentrate on never missing a payment.

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