Credit can come in handy if you are traveling or want to make big purchases. And, if you make your monthly credit card payments on time, there’s a good chance it will help you maintain a good credit score as well. But, will applying for another credit card lower your credit score? Is there even such a thing as having “too many” credit cards?
Financial experts have often said, it’s not the number of cards you have that will affect your credit score, but how you utilize them on a regular basis. With that in mind, here are a few things you need to keep in mind about having multiple credit cards:
New Inquiries Will Lower Your Credit Score
When you apply for a new credit card, the credit card provider makes an inquiry of your credit score, which causes your credit score to slightly dip. A number of such inquiries within a short duration can lower your credit score significantly.
Make Your Monthly Payments
The way you utilize your credit card plays a significant role in whether or nor your credit score is affected. If you pay your bills late, it is likely that your credit score will drop. Also, whenever possible, make sure to repay the balance in full by the end of the month. If you are unable to repay the complete balance, you should attempt to clear as much as possible to keep the interest payable to a minimum.
Keep Older Credit Card Accounts Open
Closing a credit card account for which the balance is paid off can do more harm than good since it increases your debt-to-income ratio. Further, the longer you’ve had your credit card, the higher your credit score is likely to be, provided you’ve repaid your monthly dues on time. So, make sure to not close an unused credit card that you’ve maintained for a few years.
If you’ve recently signed up for a credit card, you should focus on making your monthly payments on time and keeping your balance to a minimum. If you’ve had your credit card for many years, you may want to consider adding a new card that has a lower rate of interest and better rewards. However, you’ll still need to make it a priority to make your monthly repayments on time and keeping the balance low.
