How Many Credit Cards Should I Have to Build Credit Score?



While carrying multiple credit cards is often associated with credit card debt, it can be a useful tool for improving your credit score if strategized correctly. Reports show that the average American consumer held 3.84 credit card accounts in 2020. Learn more about how multiple credit cards can affect your credit score and how to strategize your credit card use below.

How Many Credit Cards Should I Have to Build My Credit Score?

an excellent credit report

There’s no magic number for the amount of credit cards to build your credit score. Instead, the ideal formula depends on your personal financial situation. Some people opt for just one credit card because using and paying it consistently is one of the simplest ways to build their credit score.

While credit reports don’t penalize single credit card holders, adding extra credit cards can have subtle effects that lead to stronger credit scores. Multiple credit cards also offer benefits like earning a variety of cashbacks or travel credit rewards and providing backup in case of emergencies or compromised cards.

What’s a Credit Score?

A credit score is an expression between 300 and 850 that indicates an individual’s credit risk. It’s calculated by deriving information from your past credit behavior and current financial context. The higher your score, the more confidently lenders and creditors perceive your ability to pay bills on time. Better credit scores can mean you receive more advantageous credit terms with lower interest rates and payments.

How Multiple Credit Cards Affect Your Credit Score

a brown leather wallet with multiple credit cards sticking out

Your credit score takes into account a variety of factors and tendencies regarding your credit behavior. Let’s look at a few ways that multiple credit cards might affect your credit score.

Credit Utilization

credit cards sit on top of bank statements

Your credit-utilization ratio, sometimes also called your debt ratio, is the percentage of your overall credit in use. The credit scoring models use your overall credit-utilization ratio for all your forms of credit as well as individual credit cards as a major calculation in your overall score.

When you increase your overall credit limit by adding additional cards, it can lower your credit-utilization rate. Ideally, you should keep your credit-utilization ratio below 30%. With one credit card with a $1,000 limit, that means your balance shouldn’t exceed $300. If you have two credit cards each with a $1,000 limit, that means you can split up to $600 on the credit cards and maintain the overall 30% utilization.

Length of Credit History

Lenders trust older credit more than newer credit. A long, stable credit history shows that you’re reliable and trustworthy. If you close one old credit card to open a new one, it may negatively affect your credit score because the old credit is no longer factored into your report. If you keep both cards, your report considers the average age across all your forms of credit. While the average age might go down as you open new credit card accounts, the effect may have fewer negative consequences than closing an old card for a new one.

This can be useful if you want new cards for the rewards or perks that they offer and find your old credit card terms obsolete. You can sometimes negotiate for a no-fee version for the old card, letting you keep the account without paying for it.

Payment History

credit cards, a checkbook, US money and a calculator

One of the biggest factors in your credit score is your payment history. Consistently paying your bills on time has a positive effect on your score while late payments damage your score and portray you as a risky credit applicant. Credit reports consider account penalties like late payments, late payment frequency and the recent date of your latest delinquency. When you have multiple credit cards, it’s important to pay your bills on time to keep your credit score up.

Account Diversity

Account diversity refers to the various types of accounts and debt on your credit report. The more diversity in your report, the better your credit score might be. Installment debt is a term used to describe fixed payment accounts like personal loans, mortgages and auto loans, and revolving debt is a term used for loans and credit cards with variable payments.

Account diversity is not a major consideration in your credit score, but adding credit cards may improve your credit score if most of your accounts are installment debts. Adding another credit card if most or all of your accounts are revolving debts is unlikely to affect your credit score.

Risks of Multiple Credit Cards

a credit card application

Using multiple credit cards to build your credit is beneficial only if you’re able to manage and keep track of each account meticulously. Otherwise, your credit score might suffer more than if you had just kept to one card. Consider these risks of multiple credit cards and tips to manage your credit cards well.

New Credit Risk

a person uses Apple Pay to make a credit card payment

Making many credit applications and inquiries or opening new accounts in a short period of time can have a negative impact on your credit score. While one application or account every six months or more shouldn’t have a negative effect on your credit score, too much activity within six months can suggest that you’re a risky applicant to creditors and lenders.

Maxing Out Cards

Having multiple credit cards doesn’t mean you should max them all out. Using 90% or more of your credit limit for each card or across your overall credit, for example, can have significant negative consequences for your credit score. Keep your credit-utilization low by paying off your credit card before the end of the statement period and maintaining as close to a $0 balance as you can. If you’re prone to overspending, multiple credit cards may not be the right credit-building strategy for you.

Late Payments

a past due credit card bill

Missing your minimum payment amounts can have significant, long-lasting negative effects on your credit card. Keep your due dates organized and ensure you’re not overextending your means so you can pay off each balance in full every month. Setting up automatic payments can also be a good method to avoid late payments.

Multiple Fees

Many credit cards come with opening and annual fees. When you have multiple credit cards, these fees can add up quickly. While it’s not always possible, you may be able to negotiate some of your credit card terms to include no or reduced annual fees.

Choosing Multiple Credit Cards

the front of a credit card

If you’re ready to build your credit score with multiple credit cards, consider the factors that make each credit card a good fit for you. These include:

  • Benefits. You may want cash back rewards for groceries and other common spending, or you might want travel points.
  • Fees. Consider if you’re okay with annual fees, or if you prefer credit cards with fewer rewards but lower or no annual fees.
  • Credit. Your credit score and financial situation are determining factors in which credit cards you’re eligible for, so get a good understanding of your financial picture to find a well-aligned credit card.

If you’re ready to optimize your credit score, contact Wise Loan for more information on how to get started and make the most of your credit.

The recommendations contained in this article are designed for informational purposes only.  Essential Lending DBA Wise Loan does not guarantee the accuracy of the information provided in this article; is not responsible for any errors, omissions, or misrepresentations; and is not responsible for the consequences of any decisions or actions taken as a result of the information provided above.