How many credit cards can you have before it lowers your Fico score. We have five should I cancel a couple of them?
Equifax says the standard average of households has four that they use. That's one of the reasons for my low score...but since I'm combining a bunch...hopefully it will help. L
There is a "MIX" deal with store cards, VISA/MC/AMEX/DISCOVER, car loan, mortgage... The correct # is hard to say... It has LOTS of variables... I have "LOTS" of cards, but I use them LOTS... Other people have 4 or 5 cards MIGHT have a better score than me...
These is no exact answer. There are two questions here. One: How many cards can you have before your score goes down. Lets assume that you pay of all cards every month. Lets also assume that you use any cards you have at least once every six months. You want to keep the average age off all accounts (this includes negatives, positives, open, and closed) over five years. You also want to keep the total number of accounts opened in the last three years as small as possible. Lets say six accounts or less. You probable could accumulate up to perhaps 14 credit cards and 60K to 100K in total credit line without loosing many points. The best number though is probable one Amex card, One Diner Club, Two store cards, and four Visa or Master cards. Two: How many cards can you have with balances without impacting your score. Zero. The more debt you have and the more cards the that have balances the more your score goes down. In general you want to keep your total average utilization below 10% or 15%. So if you had six cards, you could use two in the fist month and pay them off when the bills come, use the next two the second month and so on. Wen you need to get your score up, like before you apply for a mortgage, you pay all cards down to zero about 8 or 9 weeks before you want to apply and use just cash. During this period if you have to charge, use a Amex charge card (Amex green, gold, or Platinum). Having a balance on a Amex charge card does not seem to impact you FICO score one way or the other.
You can keep a balance down on your card(s) if you have access to PAY ON-LINE... As soon as your charges show up on-line pay some or all, or a few days before the billing date, pay all except $100...they will report to the CRA'S $100... ...OH NEVER-MIND...THAT WOULD BE CHEATING!!!!
My experience has shown that multiple cards don't hurt if your usage is low. I thought that perhaps I had too many, but my new Amex skymiles card has actually increased my score. The really important thing seems to be low balances on the fewest cards possible.
Re: How many credit cards are to ma Lieutenant! Another factor would be your average age of credit history. In other words - if your oldest credit file is 15 years old - having 8 to 10 cards probably wouldn't hurt - as long as your balances were fairly low. However - as it is in my case - if your oldest credit card reporting is only 4.5 years old - and you have over 5 or 6 cards - that seems to hurt your score more. In either case - your best bet is keeping your credit utilization low - 10% to 15%.
I say, it all depends on the limits and rates you are paying. I don't have enough cards and I have over 18 personal cards, all VISA and Mastercards. The Amex cards are for business, I don't count them in my calculations, but don't go by me, I have no idea what my score is and I really don't care, as long as they keep sending me those teaser rates. www.creditsense.com
The original question was how many credit cards are to many before your FICO score is negatively impacted. Calypso I appreciate your input. This is a process of learning for all of us as Fair Isaac will not let us see their secret credit score formula, but let me ask you this. What was your total credit line before you got the new credit card, and what was it after? From what I have learned, $8,000 to $12,000 of total credit line will give you a good credit score and having $25,000 will give you a little bit more. Beyond that, additional open line will have negligible positive impact. Congratulations on you Amex card. May we all have better credit scores!
Thanks for all your advice. Our problem I see now is all five cards were maxed out until this month. I thought in order to re-establish credit(Bk in 2000) that we needed to have high balances and show that we were never late. (I'm a Blonde so thinking is not always my best quality HAHA) anyway I paid one off this month and I am going to keep doing that until I'm down to the last two which are the killers. Getsmart got notice in mail rate will go up in August. balance $1100.00 and a Platnum Capital one. I should pay off getsmart first HUH! Even with the BK exp score is 640 so if I pay down the cards and wait till the end of the year for 6 inquires to drop off my husbands score should go up quite a bit. You think?
Sounds like a good plan. Your score should go up perhaps 3 to 4 points a month just from doing nothing with balances at the same level. If you get those cards paid off the score may be 681, a respectable score, by the end of the year. It is very hard to guess. When the inquires get beyond one year old, you will get a bump as well. If you goal is to get the cards all paid off, I would work on the one with the smallest balance first and pay minimum on the others. That's a great score for a BK so recently. Good luck.
Hey Eric-- On March 11th, my FICO was 698 (it had been fluctuating between the 720s and the low 700s) On May 11th it was 780! I did pay down some balances, but they were (relatively) low to begin with (around 4K). The new Amex card started reporting in May. I was totally thrilled at the jump. It made me wonder if the model "likes" when you get new credit. (It had been a long time since I got a new card) There are so many variables that we will never figure it out. But it may be that acquiring new credit helps our scores.
Calypso Congratulations on the 780. I have herd that the FICO scoring software likes Amex cards but I have not been able to get any opinions on that. I got a gold Amex charge card in college in the early nineties and have always loved it. Any time I order over the Internet or want a record of a transactions for tax purposes I use Amex. Never paid a fee yet outside of the annual fee of course. Bringing accounts to zero helps a lot to. Have fun.
Hey thanks-- I am really stoked about getting soooo close to the magical 800. My goal is to hit it on one of the big 3 by January. Back to the original question regarding number of cards. My friend who got a new Citi AA platinum checked his Ex today and it started to report. He gained 12 points! He also had not had a new credit card in a couple of years. It does seem like the model rewards new credit sometimes. It is all so mysterious. When (not IF I hit 800 I'm buying everyone on creditnet a {virtual} round. It is funny. My Eq is now up, but my Ex went down a little. Citibank had not reported on my Ex since December. I did a short term BT in order to get a credit line increase and they reported it immediately! So I lost 14 points. One step forward, etc. I paid it off. Now it will probably be another 6 months before they report.
The fact that an account (Citibank on Experian) has not been reported in several months can cost a few points. If you pull your TransUnion report often you will see that they list the most positive accounts at the top of the bottom section. You will see that if all other thing are equal an account that is more recently reported will be above one that is reported not as recently.
