MORE LIKE THISCredit CardsChoosing a Credit CardCredit Card BasicsCredit Card Resources
There’s a strong connection between how you use your credit cards and your credit score. After all, credit cards are an easy way to show how responsible you are with borrowed money — the very thing credit scores are meant to gauge.
But if using one card responsibly is good for your credit, is it even better to use two or more? The answer: not directly.
You only need one card to build a good score
Using credit consistently and responsibly is really the only way to build a good credit score. For most people, the easiest way to do this is to get a credit card, use it conscientiously and make payments on time. This will add up to a lot of positive information on your credit reports, and, consequently, a better credit score.
But will you reap even more credit score benefits by having multiple credit cards? NerdWallet reached out to Anthony Sprauve, senior consumer credit specialist at FICO, which is responsible for the most widely used credit scores in the United States. “You don’t need multiple credit card accounts to have a good FICO score," Sprauve said in an email. "You can have a high score with one well-managed credit card account.”
It's a common misconception that you need multiple credit cards to have strong credit scores. That idea may be rooted in a misunderstanding about one element of credit scoring formulas: the mix of credit accounts on your report. Credit mix accounts for 10% of your FICO score. But "mix" in this context refers to having different types of accounts on your credit report.
“You are rewarded for having multiple kinds of accounts — auto loan, mortgage, line of credit, etc. — but you are not penalized if you don’t," Sprauve explained.
A credit card is a revolving account, meaning the balance goes up and down over time as you make purchases and pay them off. That's different from an installment account, like a mortgage, which has a balance that gradually decreases over time as you pay in monthly installments. It's good to have both revolving accounts and installment accounts on your report.
More cards could give you an indirect boost
Although adding extra credit cards to your profile won’t directly help your score, it could provide an indirect lift by reducing your credit utilization ratio. Utilization is simply the amount you owe on your cards divided by your available credit. It plays a major role in the 30% of your FICO score that's determined by amounts owed. The lower your utilization, the better — below 30% is preferable, and below 10% is ideal.
Utilization is calculated on each of your individual cards, as well as across all the cards in your name. Opening a new card account will boost your available credit, which can drive down your overall utilization, and that could have a positive effect on your score. This assumes, of course, that you don't run up a big balance on the new card.
Keep in mind, though, that opening a new card account can have both positive and negative score effects. For one thing, a new credit application will usually trigger a hard credit check, causing your score to take a small, short-term hit. A new card also lowers the average age of your open accounts, which could negatively affect the 15% of your credit score determined by the length of your credit history — especially if you have a short credit history to begin with.
Also, be careful not to open too many credit cards at once. Several credit card applications in a short window of time is correlated with credit risk, and your score will probably drop as a result. If getting one additional card will substantially improve your credit utilization ratio, applying might be smart — but be sure to wait at least six months before you get another.
» MORE: How to apply for a credit card so you’ll get approved
Tips for building a solid score
If you’re trying to build and maintain good credit, you’ll need to show a strong and consistent track record of managing borrowed money responsibly. Specifically, it’s important to:
Pay all your bills on time. No exceptions!
Avoid using more than 30% of the credit available on each of your credit cards, at all times during the month.
Use credit regularly.
Only apply for credit you actually need.
Review your three credit reports at least once per year for accuracy. If you spot an error, take steps to have it corrected.
» MORE: 8 ways to build credit fast
FAQs
More cards may help you with keeping credit utilization low. On the other hand, if having lots of cards makes your life complicated and you miss a payment, that can devastate your scores. Make sure you're able to stay on top of due dates.
Does having multiple credit cards improve credit score? ›
Having multiple credit cards can indirectly impact your credit scores by lowering your debt to credit ratio—also known as your credit utilization rate. Your credit utilization rate is the amount of credit you use compared to the total credit available to you.
Will getting another credit card improve my score? ›
A new card will increase your overall credit limit. If your spending stays the same, your overall credit utilization will be lower, and that could help your score.
How to get a 720 credit score in 6 months? ›
To improve your credit score to 720 in six months, follow these steps:
- Review your credit report to dispute errors and identify areas for improvement.
- Make all payments on time and avoid applying for new credit.
- Lower your utilization ratio by paying down balances, increasing credit limits, or consolidating your debt.
How to Raise your Credit Score by 200 Points in 30 Days?
- Be a Responsible Payer. ...
- Limit your Loan and Credit Card Applications. ...
- Lower your Credit Utilisation Rate. ...
- Raise Dispute for Inaccuracies in your Credit Report. ...
- Do not Close Old Accounts.
Too many credit cards for most people could be six or more, given that the average American has a total of five credit cards. Everyone should have at least one credit card for credit-building purposes, even if they don't use it to make purchases, but the exact number of cards you should have differs by person.
How to get 800 credit score? ›
Making on-time payments to creditors, keeping your credit utilization low, having a long credit history, maintaining a good mix of credit types, and occasionally applying for new credit lines are the factors that can get you into the 800 credit score club.
How can I raise my credit score 100 points in 30 days? ›
For most people, increasing a credit score by 100 points in a month isn't going to happen. But if you pay your bills on time, eliminate your consumer debt, don't run large balances on your cards and maintain a mix of both consumer and secured borrowing, an increase in your credit could happen within months.
Is 700 a good credit score? ›
Achieving a credit score of 700 officially places you in the good credit score category, although it does fall slightly below the average. In April 2021, the average FICO score was listed as 716 following a generally upward trend in average credit scores over the past 10 years.
What is the credit limit for credit one up to $2000? ›
Credit One Platinum's maximum credit limit is around $2,000, according to customer reviews. Some people report being approved for this amount right away, while others have worked up to it over years of responsible card use. The minimum credit limit for Credit One Platinum is just $300.
Who Has a 720 Credit Score?
| Credit Score | Tier | Percentage of Americans |
|---|
| 720 – 850 | Excellent | 38.12% |
| 660 – 719 | Good | 17.33% |
| 620 – 659 | Fair/Limited | 13.47% |
| 300 – 619 | Bad | 31.08% |
As someone with a 650 credit score, you are firmly in the “fair” territory of credit. You can usually qualify for financial products like a mortgage or car loan, but you will likely pay higher interest rates than someone with a better credit score. The "good" credit range starts at 690.
How to get a 900 credit score in 45 days? ›
Here are 10 ways to increase your credit score by 100 points - most often this can be done within 45 days.
- Check your credit report. ...
- Pay your bills on time. ...
- Pay off any collections. ...
- Get caught up on past-due bills. ...
- Keep balances low on your credit cards. ...
- Pay off debt rather than continually transferring it.
It's a good idea to pay off your credit card balance in full whenever you're able. Carrying a monthly credit card balance can cost you in interest and increase your credit utilization rate, which is one factor used to calculate your credit scores.
How fast does credit score go up after paying off a credit card? ›
How long after paying off debt will my credit scores change? The three nationwide CRAs generally receive new information from your creditors and lenders every 30 to 45 days. If you've recently paid off a debt, it may take more than a month to see any changes in your credit scores.
How to boost your FICO score fast? ›
Paying your bills on time Is one of the most important steps in improving your credit score. Pay down your credit card balances to keep your overall credit use low. You can also phone your credit card company and ask for a credit increase, and this shouldn't take more than an hour.
Will two credit cards build credit faster than one? ›
You really only need one credit card to start accumulating credit, but the more you have and the more responsibly you use them, the more opportunities you have to earn points and gradually increase your credit line.
Is it better to cancel unused credit cards or keep them? ›
Canceling a credit card will cause a direct hit to your credit score, so more often than not, you'll want to keep the account open. Correctly managing an open, rarely-used account may require some extra attention, but the added effort will help your credit in the long run.
Is 5 credit cards too many? ›
There is no right number of credit cards to own, and owning multiple cards gives you access to different rewards programs that various cards offer. Owning five cards, for example, would give you a bigger total line of credit and lower your credit utilization ratio.
Why did my credit score drop 100 points after opening a credit card? ›
When you open a new credit account, it lowers the overall age of your credit. In addition to the age of credit, opening up any new credit account generally requires a hard inquiry, which could ding your credit score a few points temporarily. After about two years, the inquiry should drop off.
