To Achieve Excellent Credit Score, How Many Credit Cards Should You Have?

Achieving an excellent credit score of 750 to 850 is like having VIP access to some of the best rates when for loans.

It means that you get to pay lower finance charges on credit card balances and outstanding loans …

Which means that the less money you use to pay for interest, the faster you get to pay off your loans and …

The more money you will have at your disposal for other purchases or expenses.

I always get asked by people who are still building their credit this question.

“How many credit cards should I have to achieve an excellent credit score?”

That is a very great question indeed.

The answer though, may not be what you would expect.

The answer …

… There really is no exact number of cards.

That’s according to my sources at FICO Scores.

According to them, it’s not the number of credit cards that is important. What is important is how you manage the accounts that you currently have.

Are you paying your bills on time?

Are your balances low relative to your available credit limit?

Your overall actions in managing your credit accounts are what really matters to your credit score.

Stay with me though, as there is something else that you should know.

Based on a recent study on credit worthiness, cardholders with scores above 800 had an average of three active credit cards.

The study also found that if you include closed accounts, these cardholders had 6 cards in total.

Given that profile, I guess that sort of answers this question on the number of cards a person should have.

But remember, it’s really not about the number of credit cards. It’s really about how you manage your accounts.

One of the important factors that you should also consider is your overall utilization ratio.

The utilization ratio is how much your credit balance is relative to our total credit limits.

Try to strive for a utilization ratio of less than 30%.

For example, if you are carrying a balance of $1,000 and your credit limit is $10,000, then your utilization ratio is 10%.

Keep that rule in mind and that should help you build an excellent credit score.

Also, make sure to age your credit card accounts as these can help with your credit score. An credit account in good standing for a long time shows stability, which is a plus.

Open accounts, even if they are not active, will not negatively impact your score.

In fact, it helps in the overall calculation of your utilization ratio as it helps increase your available credit.