Credit score

Do Multiple Credit Cards Help Your Credit Score?

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The largest collection of valid credit cards belongs to Guinness World Record holder Zheng Xiangchen, who has a huge 1,562 cards. Trust us, you don’t need that many, but having more than one credit card can provide several financial benefits if used carefully.

“For a disciplined card user, there’s no downside to having a lot of cards,” says John Ulzheimer, a credit score expert who previously worked for FICO and Equifax. “But there’s a downside to having too little, especially when it comes to credit scores,” he says. Here’s what you need to know to improve your credit score and maximize your rewards.

Does having more than one credit card help your credit score?

In most cases, having more than one credit card can improve your credit score. “Having multiple credit cards makes it easier to keep your credit utilization low, which is better for your credit scores,” says Mason Miranda, credit industry specialist at Credit Card Insider. Your credit utilization ratio is the amount you borrow compared to your total line of credit. “If you have multiple credit cards with large open and unused lines of credit, even a high balance may not impact your credit usage too much.”

In fact, there really aren’t too many credit cards from a credit score perspective, according to Ulzheimer. “Now having too many cards with balances or having too much credit card debt, yes, that can cause you to have lower scores,” he says. But as long as you’re paying off your balances in full, “just having a lot of credit cards isn’t punitive.”

However, you don’t want to ask for too many new accounts in a short period of time if you can help it. Try to wait about six months between credit applications to be safe, Miranda says.

There is one exception to this rule of thumb. When shopping around to compare rates for things like a mortgage or car loan, credit score models will count multiple applications as one if completed within a short period of time, usually 14 to 45 days, depending Equifax.

Another thing to keep in mind is that each credit card issuer has their own rules about how often you can apply for their cards and how many you can have at a time. But you’re not likely to run into these limits if you acquire cards slowly, as Miranda and Ulzheimer suggest.

How do credit scores work?

Your credit score is a numerical representation of your creditworthiness or the level of risk a lender is taking when extending credit to you. If you have excellent credit, lenders will assume you’re likely to make payments on time, so they’ll give you the best terms and lowest interest rates. If you have bad credit, you will either be rejected or pay more money to borrow if you are approved.

There are five key factors that contribute to your FICO score:

  • Payment history (35%): This examines your history of on-time and late payments. To improve your credit score, always make your payments on time and in full. You might want to set up automatic payments to make sure you never miss one.
  • Amounts due (30%): This looks at your overall debt versus your available credit. That’s the main reason why it’s important to pay your statement balance in full each month, says Miranda. This will ensure that you are not carrying a balance and will positively contribute to your credit scores by reducing your use of credit, he says. Try to keep your credit utilization ratio below 30% for the best credit score.
  • Length of credit history (15%): This looks at how long your accounts have been open, usually calculated by taking the average age of all cards. To maintain a longer credit history, you should avoid closing a credit card. “The longer you keep your credit card accounts open, the better,” says Miranda. “That’s because credit reporting models like to see mature credit accounts; the older the average age of your accounts, the better for your credit scores. »
  • Composition of credit (10%): This looks at the different types of credit you have – revolving (like credit cards or lines of credit), installment (like student loans and mortgages), and open (like utility bills). You may have a great score with revolving debt only, but demonstrating that you are able to handle different types of debt can give you an extra boost.
  • New Credit (10%): This examines recent requests for new credits. Reapplying for a credit card will cause a slight but temporary drop in your credit score, so you should avoid applying for too many cards at once. “It should be treated like a marathon, not a sprint,” Ulzheimer says. “Acquiring credit cards should happen organically, like when you need them. It should take you many years to build credit card inventory.

Which cards are the best to combine?

If you can qualify for cashback or rewards cards, you can maximize your rewards by having more than one. A good strategy is to choose a card with a high overall win rate on all purchases and one or two other cards that earn extra points on a spending category that is important to you. Here are some pairs of cards you might consider.

Chase Trifecta and Chase Quartet

Points from Chase Ultimate Rewards cards can be pooled in the same account and used for a single purchase through the Chase Ultimate Rewards portal, so combining three or four cards from different Chase card families can be a great rewards strategy. For example, you can combine some of these cards and use them for different purposes:

With this strategy, you can transfer rewards from bonus categories to your Chase Sapphire Reserve card account and use them at the premium rate – each point worth 1.5 cents instead of the standard 1 cent – ​​to travel through the Chase Ultimate Rewards portal. . For example, the Chase Freedom Unlimited offers 3% cash back on dining at restaurants, including eligible takeout and delivery services. If you were to transfer these points to your Sapphire Reserve account, they are each worth 1.5 cents for travel. If you were to spend $5,000 on meals in a year, you would earn $225 for your next trip. If you don’t want to pay the Chase Sapphire Reserve’s $550 annual fee, you can also use this strategy with the Chase Sapphire Preferred. When you redeem points for travel from your Chase Sapphire Preferred account, each point is worth 1.25 cents.

If you plan to get multiple Chase cards, be aware of the unconfirmed “5/24 rule”. While the company hasn’t confirmed this rule, rumor has it that Chase won’t accept your application if you’ve applied for five or more cards (from any issuer) in the past 24 months.

  • Introductory offer:
  • Annual subscription :

    $95

  • Regular APR:

    15.99%-22.99% variable

  • Recommended credit:

    670-850 (good to excellent)

  • Apply now external link icon On Chase’s secure site
  • Introductory offer:
  • Annual subscription :

    $550

  • Regular APR:

    16.99%-23.99% variable

  • Recommended credit:

    740-850 (Excellent)

  • Apply now external link icon On Chase’s secure site
  • Introductory offer:
    Earn 1.5% Extra Cash Back
  • Annual subscription :

    $0

  • Regular APR:

    14.99% – 23.74% variable

  • Recommended credit:

    670-850 (good to excellent)

  • Apply now external link icon On Chase’s secure site

Cash back and travel cards

Another strategy is to combine a travel rewards card that earns points on travel and dining with a cash back card that earns points on all purchases. For example, you can combine the American Express® Gold card, which earns extra points on travel and dining, with the Citi® Double Cash card, which earns double points on all purchases (1% cash back on purchase, plus 1% you pay for these purchases).

Fixed cashback and tiered or rotating cashback cards

If you’re primarily interested in earning cash rather than miles, it might be a good idea to pair a fixed cash back card with another card that offers tiered cash back on your chosen category or categories. cash back spins. For example, you can pair the Capital One Quicksilver Cash Rewards credit card, which earns a flat rate on all purchases, with the Chase Freedom Flex, which earns 5% cash back in rotating categories every quarter.

Our experts’ favorite pairings

Miranda says he and his wife use several different free cards. “The Citi Double Cash card is our favorite and the one we use most often. It earns us 2% cash back on any purchase at any location that accepts Mastercard (1% cash back when you buy, plus an additional 1% when you pay for those purchases). It’s rare to see a cash back card this high at a percentage with no annual fee,” he says. “We use the American Express Blue Cash Everyday® card specifically for shopping. We get 3% on all of our runs, and there are great incentives with their partnerships.

Pro tip

To maximize your rewards, pair a common spending card with a card that earns bonus points in a particular category.

Ulzheimer says he associates a high-level travel card with a hotel chain card. “It’ll take care of just about anything you need for business or personal travel,” he says.
The ultimate collection of credit cards for you will depend on how and where you spend your money and what other benefits you seek. Also, watch out for welcome bonuses, as they can help you rack up rewards faster.