Many people believe that opening numerous credit cards will damage their credit score. This is a misconception. In fact, having 20+ credit cards open at once can improve your score—and here’s why.
Understanding Credit Score Factors
Credit scores aren’t arbitrary; they’re calculated based on five main factors:
- Payment History (35%) : Making on-time payments is the single most important factor.
- Credit Utilization (30%) : This is the amount of credit you’re using versus your total available credit.
- Credit History (15%) : The longer you’ve responsibly used credit, the better.
- Credit Mix (10%) : Having a variety of credit accounts (credit cards, loans, etc.) is viewed positively.
- New Credit (10%) : Frequent applications can temporarily lower your score, but this effect diminishes over time.
The Advantage of Multiple Cards
A high credit limit across many cards allows for low credit utilization. For example, if you have $100,000 in available credit and spend $1,000, your utilization is just 1%. Banks see this as low-risk behavior.
Why this matters: Banks assess risk. Low utilization signals financial stability, making you an attractive borrower.
Payment Timing Matters
Credit bureaus report your credit utilization at the statement closing date. A simple trick is to pay down most of your balance before the statement closes. Even if you spent heavily during the month, the reported utilization will be low.
Long-Term Account History
The average age of your credit accounts also impacts your score. Keeping some cards open for years demonstrates consistent credit management.
Why this is important: A longer credit history builds trust with lenders. New applicants are viewed with more scrutiny than those with established records.
Maximizing Your Score
Combining responsible habits – on-time payments, low utilization, and a mix of credit accounts – can lead to an excellent score. The author’s score currently sits at 824-827 (Equifax & TransUnion), despite frequent card applications.
The takeaway: A high credit score isn’t just about avoiding mistakes; it’s about strategically leveraging the system. Having multiple cards can be a powerful tool when used correctly, not only for rewards but also for building a strong credit profile.
