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Does Having Too Many Credit Cards Hurt Your Score?


Having too many credit cards can penalize your credit score, but not for the reasons you might think. In truth, the only time that having lots of credit cards will hurt you is if you perpetually carry a balance on your cards. In that case, yes, it can be very damaging. If you do not typically carry a balance then it does not normally matter how many credit cards you have. (Read: How your credit score is calculated)

We get a lot of questions regarding having multiple credit accounts. Let’s take a look at one of these situations, and then break it down.

One of our readers, A. Brown, sent us this question:

Hello – I recently requested and received my credit report and score from Equifax. I was happy that it came back at 792. However, it stated that I have too many open accounts and too many recently opened accounts. Over the years I have had my fair share of credit cards, car loans, lines of credit. But I have always had a plan, and currently I have a $0 balance on most all of these open lines of credit. I do have one credit card with 6k on it, plus I have two mortgages. Will simply waiting until the accounts are no longer considered “new/recently opened” help me? I know my score is good, but I want it up over 800. Thanks.

A. Brown, Thanks for your question!

Let’s cover the basics first: The credit score you received might not actually be your FICO score. Check your report carefully to verify this.

Equifax itself might penalize your “score” for having too many open accounts, that does not mean that FICO does. Also, when you decide to borrow money each lender has a different set of qualifications you have to meet. Some lenders will reject you on the basis of having too many open accounts, but it is not a majority.

Lenders are usually far more concerned with how you are using the accounts you have open. When you apply for a line of credit, most lenders will check your FICO score, and not the scores from the individual bureaus. That is why it’s so important to make sure that the score you received was actually your FICO score, and not a score based off of another model.

Experian in particular is bad about this, but I have had it happen at TransUnion too. I am not assuming that Equifax is above passing off a FAKO score either. Just be sure to read your fine print before you make any decisions about what to do with your credit cards.

As far as Equifax goes, yes they do penalize your score based upon the number of accounts you have open. However, the reality is that closing those accounts out will penalize your FICO score more than having too many of them open. If you absolutely, positively feel you must close some of them out, then close your youngest cards, and not more than one account every three to six months.

You mentioned that you wanted to get your credit score up over 800. The best way to do that is actually to leave these accounts open and not borrow against them. You are exactly right to just let them age.

Statistically speaking, people with credit scores over 800 only use about 7% of their available credit. Start by figuring up the amount you have available to borrow vs. the amount you owe. If you can get that figure under ten percent then your scores will go up regardless of the number of accounts you have open.

Believe it or not there are some people out there carrying as many as 50 different credit cards. Yes, how many accounts you have matters and can slightly lower your score. How well you manage those accounts, and how much you owe on them matters far, far more.

If you give your accounts time to age, get your total debt to under 10 percent of your available credit, and you still do not see an improvement in your score, then I would wait a few months and try closing a low-limit, younger account out. Those with the smallest credit lines, and the shortest history should be the only ones you cut.

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