How Many Credit Accounts Should I Have?

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How Many Credit Accounts Should I Have?

Credit accounts lay the foundation of your credit report. Without much credit activity, you likely won't have a credit score depending on the scoring model. Whether you have one account or ten, you might be wondering if there's a perfect number of accounts you should have. Let's shed some light on how your number of accounts can affect your credit situation.

How many accounts do I need?

First off, "credit accounts" refer to any account listed on your credit report: credit cards, mortgages, auto loans and personal loans, for example. There isn't an exact number of credit accounts it takes to get a "perfect" credit score. The optimal number of open accounts for you will depend on your situation. If you want to spread out your balances, so you aren't close to hitting your credit limit on one particular account, having more credit card accounts will give you more credit to work with. Opening new credit cards could also earn you better rewards deals, like cash back. But if you're content with how many credit accounts you have or you don't want to use credit at all, that's fine too. It's really up to you.

Impact On Your Credit

Maintaining, opening and closing accounts all reflect on your credit risk and behavior. These actions can influence a bunch of different factors that are figured into your credit score.

  • Credit card utilization: Your number of credit cards will directly impact this factor, which is highly influential to your score. The more credit card accounts you have, the higher your total available credit limit will be, giving your balances more room to breathe.
  • Hard inquiries: Hard inquiries may cause your score to drop by a few points initially, but they're necessary if you want to apply for a new account. The impact to your score usually declines as the inquiry eventually ages off of your report.
  • Recent credit behavior: This factor looks at the number of new accounts you've opened. It isn't the most influential, but opening a lot of new accounts in a short period might suggest to a lender that you're desperate for credit.
  • Account mix: Having different types of accounts generally shows that more lenders believe in your ability to repay debt. Boasting a variety of account types on your report can also establish that you have a positive track record of responsible credit behavior.

None of these factors are necessarily reasons to open more accounts or not, but they're something to consider. Let's go over a few scenarios to make this more clear:

Scenario #1: You're just starting out on your own and you've recently opened your first credit card. Should you keep applying just to try and boost your total number of accounts? Well, probably not. Stick to that one card and open another when the time is right. Keeping up your on-time payment history, an extremely influential factor, is usually more important than boosting your total accounts.

Scenario #2: You're an established credit user. You've proven that you can manage one credit card for several years, and you feel comfortable opening another card. Plus, you could use the extra perks and buying power. In this situation, a new account might be a good idea. A new card would help your credit card utilization rate and raise your number of total accounts.

Scenario #3: You're about to pay off your student and auto loans. Congratulations! You're worried, though, that you may see a dip in your credit score, which seems backwards to you. Your total accounts, account mix and age of credit history might be impacted by paying off your loans. Does this mean you should put off your repayments? Not exactly. You'll need to consider how much debt you're carrying, interest charges that add up over time and how these loans might limit your spending ability. Sometimes, other aspects of your financial situation are more important than your credit health.

Bottom Line

There's no one magic number of total accounts that you should be aiming for. Your decision to open or close a credit card or loan should depend on the specifics of your financial and credit situations. What's most important isn't the specific number of accounts on your credit report, but what you do with them. Before you make financial decisions, just keep in mind how the number of accounts you have will affect other credit score factors. You can do so by checking your credit report and reviewing the most important factors for a snapshot of how you're doing. Soon, you'll be on your way to a well-rounded credit file.

About the Author: Charmaine Ng is the Communications Coordinator at Credit Karma. When she isn't writing her way through life, you can find her reading about the latest in entertainment and watching television almost every night of the week. Say "hi" @noodlemaine!

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5 Contributions
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Helpful to 298 out of 339 people

I have zero long-term debt and never carry a balance.  I've never been late or delinquent.  I have significant income and assets to pay cash for large purchases.  Can someone explain to me why I get dings on my credit for only having 4 credit cards?  Ironically, if I apply for additional cards, I will get dinged for credit checks.  Not that it really matters to me, but it seems odd that you get dinged for not having 20+ forms of credit.    If I were a creditor, I would be worried about someone with 20+ forms of credit and prefer someone with only a few that are consistently paid off.

Reply by
off2jamaica

1 Contribution
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Helpful to 116 out of 143 people

That is the stupidity of how credit scores are calculated. I am in the same boat. Not debt, pay off balances, financially secure and I have a high score which I would care less if it was zero. I wouldn't worry if I were you. If you are not going to be changing cards or buying on credit in the near or somewhat near future, you might want to close your ratings to others. It helps that you get no credit checks, current accounts have access and that helps with identity theft. Just my 2 cents.

Reply by
Scout57501

1 Contribution
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Helpful to 163 out of 192 people

I agree completely.  This "thinking" must have come out of a "3 martini lunch".  If I go from 5 to 15 accounts and have a very low utilization I can have available credit that is 10 times my annual income.  Yeah, that sounds like an ideal profile.  They used to say creditors were worried you could get in over your head...now they encourage it.

Reply by
wildflower5

3 Contributions
274 People Helped
Helpful to 178 out of 222 people

Entities such as credit karma are there for one reason, to get you to subscribe to more credit card cos.

This is what pays credit karmas bills.

Top Contributor

Reply by
utahwil

14 Contributions
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Helpful to 1 out of 1 people

This is just my way - but debt is the 20th and 21st centuries versions of slavery, or indentured service. Remember the credit score system FICO or Vantage are for lending/bank/instatutions.   These organizations only make money if the consumer borrows and tries to keep up with the Jones's .  When consumers like yourself get to the point where you have money or make a good deal of it and can pay cash - well you still have a score and it might go down.. But it is a WHO CARES senario.   Why because as a cash basis individual your credit score can be 10 points - as it won't matter. 

So what one has to realize is a credit score is for the middle and lower class to keep them in place and a form of control.  Not that it is a bad thing in today's GIVE ME without working society.  

Remember - Bill Gates, Warren Buffet etc.. do you think they give a rats about their credit score - no they don't... it is us every day folks who work for these folks that this system of credit scores were made for... They are there as a guide !  Just think if we were back in the 1950's or 60's - this information would NOT be provided it was a huge secret for banks -lenders..

Reply by
HG318

1 Contribution
1 Person Helped
Helpful to 1 out of 1 people

Exactly my story, collateral should also play a big factor if able to liquify assets

Reply by
tefr

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Credit cards and credit scores are an outrageous racket!  To "improve my scores", one of the things advised is that I open MORE credit accounts!  How utterly ridiculous!  Myopic thinking like this is why the banks faltered in 2008!  Encouraging people to assume MORE debt is counterintuitive!

Reply by
bestdjintown

4 Contributions
7 People Helped

You are right! it makes no sense to me either. Because i have been saving my money and paying cash for larger purchases like my car, aacaont owe any money to anybody, my crt score is fairly low. I see some people on different credit related websites haveing 10/15 different credit cards totaling to $100K or even more. I guess i would be at higher risk as a lender to open another line of credit to someone like that, given the fact that noone could guarantee me he will not go on a crazy shopping spree one day and max out $100K worth of CL. But this is corporate America, you borrow you pay back, you pay interest, you pay fees, the lower your credit score, or the less money you have, the more fees and interest they charge you, and you become the good boy too. IF not, they won't care about you. I kow there is 1000s of us here thacan afford and deserve more than a $300 secured credit card but stll denied because of couple medical bills that more emergenncy than someone who purchased a home they can not afford to begin with and defaulted on the loan, but still has a better credit score. What can we do...!

Reply by
jpr531

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0 People Helped

The reason is very simple.  It is a game constructed by the big banks to make more and more money.  They make tons of money from interest charges and fees from every credit card and line of credit people have open.  They will reward those who open more credit lines with the prize of a great credit score to be able to purchase more and more things on credit. More credit=More money for the banks. The people who pay cash for everything and don't contribute to the banks ongoing profit scheme of paying interest and fees do not get the "benefit" of a higher credit score.   

Reply by
crabjoe

4 Contributions
3 People Helped

You're getting dinged because to have good credit, you need to use credit.  The more credit you use and pay on time, the better your credit gets.  It tells lenders, you will payback what you borrowed....  And the reason they're saying 20+ is because they don't all have to be opened.  You could have had 5 car notes for two years that have been paid off.. 

Now, let me give you an example of why they want to see lots of accounts vs just a few...  The example is college students...  Most college students can handle a couple of cards and make their payments on time..  But now give them 5 cards and see what happens... They look at minimum payments and next thing they know is that they can't even make the minimum payments....  But if you see a young person that's has lots of credit accounts and is making all their payments, it tells you that they are more likely to payback what they borrowed. 

BTW, I'm in a similar situation to you..  A few years ago, I looked at the what made up my credit score and found that I needed more accounts...  And at that time, I had 2 credit cards, and a mortgage...  yup 3 accounts....  So O started opening more accounts and spreading out my spending across more credit cards...  This hurt me a bit..  I went from 4 to 7 accounts and it killed my average length of credit... when from like 10+ years to 4 years.  And the reason I say it killed it is because I can't do anything but wait to increase the length of average time....  I guess all I can do is wait...

Reply by
andreasj64

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I just wanted to give my 3 cents on the subject.  If you don't care about your credit scores, why did any of you open an account on Credit Karma and why are you posting comments?

I've got a lot of credit cards.  I didn't set out to get a lot, but I couldn't resist the deals.  For example, I was buying some parts for a bike on amazon which amounted to about $70.  An offer popped up from Amazon about a $50 credit if I signed up for, and used their card on the purchase.  Why not?  Sign me up!

 Another purchase decision I made was at a furniture store, which offered a 3 year no interest deal on a store credit card.  Why not use their money instead of my savings?  I collect interest while I pay them back cash over three years.  Why not?  Sign me up!

And another recent purchase was a surface pro from Best Buy.  One year, no interst.  Done!

The point is, there are a heck of a lot of deals out there.  I pay no interest on any of my purchase, get money from credit card companies, and use their money over the short term while keeping mine in my account as long as possible.  It just makes smart financial sense if you manage your money properly.  On the surface pro for example, what difference does it make how or when I pay it, as I'm not being charged more than what it's worth?   I just set the autopay on my bestbuy card calculated to pay it off before the deal expires.  Why not?

And what about all those cash back reward cards?  3% back on groceries, 2% back on gas, 2% back on dining out, etc, etc.  If you truly manage your money well, take advantage of the deals.  The way we can manage money online makes saving it easier and easier.  15 years ago when I was writing checks, no way.  I wouldn't even consider any of this, but now I can automate the process and maximize my return. 

Yes, I get dinged every time I open a new account.  So what?  I truly don't care about my credit score to the umpth degree, but I do care.  I want the best deal I can get which measn having a high good to mid excellent rating.  It's all about getting the most for the least.

That said, the credit ratings system is idiotic.  Why do I get dinged for being smart with my money, and caring what rate I pay? Shopping rates and moving debt to save money is just smart financially.  If I can save a point or two on a car loan or mortgage, I opening another loan pronto.  Same goes with no interest deals and cash back on credit cards.

The credit rating system is designed to invoke fear in the consumer.  It's designed to keep you parked with one lender, regardless of how bad they're ripping you off.  Find a better rate and move your debt, and you're penalized by the rating system for making a smart decision to move your debt.

I don't worry about it, ever.  If it saves me a nickel, I'm dumping the creditor. 

Reply by
andreasj64

4 Contributions
3 People Helped

@Crabjoe...  As long as you're saving money Joe, don't worry about it.  I have 35 accounts on my report, with a credit score of 761.  I have 15 credit inquires, and a 3.6 year history (I'm fricken 50, are you kidding me!!).  4% utlization.  0 late payments.  0 derogatory marks.  Trying to achieve the highest possible credit rating is a complete waste of effort, and will cost you money.  Just try to hold it somewhere in the high good to low excellent range.  If you're going for a long term loan, hold tight on borrowing prior and get your rating in the excellent territory for the best rate.  Maximize your return from the lendors.  But never ever worry about how high your rating gets.  >800 is just bragging rights, nothing more.  725-800 and you're wisely using your rating to your advantage. 

Reply by
andreasj64

4 Contributions
3 People Helped

@Crabjoe...  As long as you're saving money Joe, don't worry about it.  I have 35 accounts on my report, with a credit score of 761.  I have 15 credit inquires, and a 3.6 year history (I'm fricken 50, are you kidding me!!).  4% utlization.  0 late payments.  0 derogatory marks.  Trying to achieve the highest possible credit rating is a complete waste of effort, and will cost you money.  Just try to hold it somewhere in the high good to low excellent range.  If you're going for a long term loan, hold tight on borrowing prior and get your rating in the excellent territory for the best rate.  Maximize your return from the lendors.  But never ever worry about how high your rating gets.  >800 is just bragging rights, nothing more.  725-800 and you're wisely using your rating to your advantage.

Really think about it for a moment.  The rating system is designed to keep you parked with one lendor, regardless of the current rates or deals.  They penalize you for shopping rates.  They penalize you for opening new accounts.  They penalize you for closing accounts you no longer want or need.  It's all designed to make you fear change and stick with your original deal.  They don;t want you to leave them.  What they would really like is you to pay your bill every 35 days, while maintaining a solid 30% plus balance at whatever insane rate they're charging.  They also happen to penalize you for carrying too much debt, regardless of what you're paying on it.  that's to their advantage, because then they can raise the rate on what you're borrowing due to a poor credit rating making even more money.      

If you see a better rate on your car loan, take it.  If there's a better offer on a credit card then the one you're using, open it. If there's an introductory offer on a card that puts money in your pocket, take the money.  Cash back on gas, groceries, etc, use your card.  Think about it.  I spend a solid $70k a year on all sorts of things, including groceries and gas.  If I can save 2% to 3% on those daily expenses, why not?  That's $1400 - $2100 in my pocket, and credit score be ****ed.

You better know how to manage your money if you play the game though, but if you do truly know the secret to managing your own finanances, you'll save a lot.  It's definitely worth it.     

Reply by
algo7661

1 Contribution
0 People Helped

By having more than 10+ forms of credit cards, creditors would know you are responsible if you do not carry a balance or your balances are low. However, I agree with you that I would also be worried if I see someone with 20+ more credit cards only if, they have balances on those cards. Not having a high balance means you are worth money due to the fact that you have it but do not use it. This is what counts.

Reply by
Sandman619SD

4 Contributions
9 People Helped

Credit scores like auto insurance look at the statistics of life rather than taking a long consideration of an individual profile.  Actuaries compile databases of life & categorize us based on factors.  I recently paid off a furniture purchase, the no interest for 12 months if it's paid off by the end of that period.  Creditors like to see an account where we have to pay a regular amount on a schedule, some how, paying off a monthly CC statement doesn't count.  My CC gives me my FICO score monthly & soon after my furniture purchase was paid off, a note on my credit score mentioned that I lack a history of paying off amounts over time, this would be an auto load, mortgage, furniturte purchase.   My car is paid for, I rent & my furniture was paid off.  My credit score is now lower because I'm not payinig something off.  Again, this is a statitical avaluation of many credit histories & we lack that loan repayment history.  Seems like my car loan & recent furniture loan history should be accpetable, but they want active reports.

Reply by
Rogue18976

1 Contribution
0 People Helped

I only have my mortgage as a debt, and that's only $950.00 per month. ($141,000 Mortgage) All my credit cards (2) have a zero balance. Between the two cards, I have about $60,000.00 in available credit. I am retired and have about $4,600 per month income. I have over $12,000.00 in my checking accounts, and my credit score is only 812 and 814 respectively. I have NEVER paid ANY bill late. I don't understand why my score isn't 850. I don't get it. I'm certainly not going to open additional accounts that I don't need. Can anyone explain this...?

Reply by
olehammer

3 Contributions
0 People Helped

@rjv714.   That is a common misconception, likely attributed to sites like CK and others that list number of accounts as a positive or negative.  There is no aspect of a true FICO score that measures quantity of accounts (or income for that matter since you mention it).  

Typically what is measured utilization, number of accounts with a balance (optimally no more than 1 reporting on your statement), and at least one open installment account (mortgage, auto loan or personal loan).  The optimal number of open revolving (i.e. credit/charge/LOCs) is commonly understood as having at least 3 to maximise your score.  There is fundamently no reason to have more than 3 revolving accounts other than if you need more total credit to support your spending patterns and/or for their specific rewards/rates.

Reply by
econfio

1 Contribution
0 People Helped

And I thought getting my first credit card since forever would help me.  Been avoiding to avoid more dings, foolish inquiries dinged up most of my  basically excellent pay status which barely matters when having no credit cards. And when I inquired for credit card yrs ago I couldnt get any, those were dings and no credit given to someone who has no debt. Its all nonsense trap!

Reply by
Rogue18976

1 Contribution
0 People Helped

I posted this in December..." I only have my mortgage as a debt, and that's only $950.00 per month. ($141,000 Mortgage) All my credit cards (2) have a zero balance. Between the two cards, I have about $60,000.00 in available credit. I am retired and have about $4,600 per month income. I have over $12,000.00 in my checking accounts, and my credit score is only 812 and 814 respectively. I have NEVER paid ANY bill late. I don't understand why my score isn't 850. I don't get it. I'm certainly not going to open additional accounts that I don't need. Can anyone explain this...?"

I obtained a new credit card from my bank, and did a balance transfer from one of my other cards to get a cash advance at 0% until July of 2017. My credit rating went up from 813 to 830 after I did this transaction getting cash for a large purchase. I don't really understand how it all works, or why my score went up 15 points, but apparently having more accounts open has a benificial affect on your credit rating. I don't understand it all though. Can anyone explain this...??

Reply by
myhome1760

7 Contributions
33 People Helped

As long as its not criminal or neglect, why should it matter how many closed accounts a person has??

Reply by
W29

1 Contribution
0 People Helped

I agree,

I think the credit card rating is a scam to benefit the banks that issue the cards. I'm sure they have lobbiest that have pushed an agenda on credit scoring  that focuses on keeping the general public in debt.

I'm in your same position.

Reply by
isthisworthit

1 Contribution
0 People Helped

I agree with you. Everyone doesn't need umpteen credit cards. 

Reply by
Carduser55

2 Contributions
2 People Helped

You must use credit to increase your score. It may be finacially advantageous for you to have only 4 cards that you keep paid off full time but, your score and borrowing strength will suffer.

​You want to open more accounts to increase your score.

Reply by
neel2986

1 Contribution
0 People Helped

True My CS got dinged because I paid off my car loan early, somehow that was a bad thing to do... I am still laughing my *** off as to how the CC system works in this country, where I am from they litreally base your CC limit off your A/C balance and assests. I was surprised when I found that taking on more debt increases your CS. The only reason I am even remotely interested in CS is because I have heard that having a good CS can get me 0.5-1% less on home mortgage. Is it true?

Reply by
kenrmer

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0 People Helped

The whole idea of raising your credit rating is to get you to increase your options to get credit thus increase opportunites to spend $. Whether the card holder pays it off on time, or doesn't, is still $ for the card company. Remember, the card company makes $ on the companies accepting their cards for transactions PLUS the card companies make $ on users that can't make the full payments on time.

Credit companies view people that spend alot and then pay it off as very low risk to large $ volume when it comes to borrowing. Are these people good as saving? Probebly not, unless their income is well into 6+ figures.

Reply by
anothergreg

3 Contributions
26 People Helped

Experience helps creditors understand how you manage your credit.  If you only have 4 credit card accounts that make up the entirety of your history, then they don't have a decent picture that tells them how well you can manage your debt.  However, someone who has a car loan, mortgage, student loans, and multiple credit cards, and is able to manage all of this debt responsibly, the creditors are much more likely to trust them with debt.

Per your example, you said if you were a creditor, you would be more worried about someone with 20+ forms of credit versus someone with only a few forms of credit.  However, if they both have pristine credit histories then that means the person with 20+ forms of credit has proven to a greater degree that they can manage their debt much more than the person with only a few forms.

Rather than think of it in terms of credit, think of it in terms of trustworthiness.  If you were building a new house, who would you trust more to build your home?  A person who has done 20 projects ranging from  building new offices, to building new homes, to doing siding repairs, to installing new roofs, and done all of them well?  Or a person who has only built a total of 4 homes, and done all of them well?  I know if it were me, I'd put my money on the person with more proven experience.  They may very well both be on the same scale in terms of talent, but I would have more trust in the person that can give me more examples of that talent.

1 Contribution
191 People Helped

Helpful to 191 out of 217 people

Good article. Like many, I use to be confused and frustrated by how the credit system works. Some of it seems totally backwards thinking. Like if you pay off all your accounts and dont need to use credit then your score goes down. Then, I stepped back and looked at the big picture. The whole credit system was setup not to help people afford large purchases but as a way for banks to make more money. Look at it as being in their club. You pay their "dues" (interest) and they give you a higher score. Dont pay their "dues" (no balance on accounts) and you will lower your score. Sad but true, you have to pay for your credit score. Had a friend that had very good credit. He came into some money and ended up paying everything off. He did not NEED credit until well after he married and had a family. It came time for his son to get a car. My friend wanted to co-sign for his son but could not because he no longer had credit. he had stopped paying "dues" and was no longer in the club.

Credit Karma Team
Top Contributor
2949 Contributions
5310 People Helped
Helpful to 167 out of 188 people

Hi Chokaho,

Thanks for reading. To be clear, a low to moderate credit card utilization rate is beneficial (always under 30%), but you do not need to pay any interest to have a great score. You can pay off your account in full each month and watch your score rise, too. It's a common misconception that we like to clear up!

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Reply by
Madlock

28 Contributions
53 People Helped
Helpful to 32 out of 54 people

No, the whole scoring system was not created just for banks to make more money.  It was created to provide a predictive analysis based upon a given snapshot of a prospective borrower's past and current credit use to enable lenders to make informed credit granting decisions.

Like anything - you want to be chosen? Do what the choosers find desirable and don't do what's not. Want to borrow only from lenders that aren't profitable or lend according to the borrower's standards?  There's a reason lenders like those tend not to exist very long.  Sick of needing to comply with the rules of others whose money and services you desire?  Learn to live on what you can obtain on a cash basis or save up enough to become a lender and set your own rules.

But don't be surprised if the first thing you do as a lender is contract with someone who can provide a standardized metric for weighing risk.

.

Top Contributor

Reply by
utahwil

14 Contributions
242 People Helped
Helpful to 153 out of 156 people

you need to work the credit - learn when your closing dates are and when your payment due date is.  For me I work credit cards and have 4 cards.  I never just charge something rather I plan on when to charge (ok emergencies are different).  But for example - 3 of my 4 cards close on the 1st, 7th and 14th.  So any time I plan on charging I do so the DAY AFTER CLOSING - this makes it so I have 1.5 cycles to pay it off before any interest is paid.

What this means for the credit report is it always shows a balance because I have forced a not due for almost 6 weeks and the credit card companies report the balance each closing date.    By showing a balance of about 1% keeps the score high and at times I pay it off and let it be 0% - and it will jump a point or two.

Key is I never ever pay interest so am beating your so called dues idea !  Remember all things have a certain set of *RULES*, once you learn them you can BEND THEM or WORK THEM to your favor !

Reply by
luv2bex

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0 People Helped

Very well put, Chokaho.  Firstly, let me say that I have NO problem with CreditKarma --other than I liked the "old" look far more this new, more confusing, revamped one.  I sign onto CK once a month or so ... just to "check things out."  CreditKarma is free but, obviously, they are here to make money (selling something).  I understand that and have no problem with it.  I consider every offer CK throws my way with several grains of salt.

More to Chokaho's point ... Over the decades I've had my ups and downs with credit.  I've had numerous and varied credit cards.  Too, I have wondered why having MORE credit cards results in a higher credit score than having FEWER.  I think I have finally realized that Chokaho's post is spot-on.  Credit is a "club."  And The Club can be a very, very dangerous one to join -- especially if you are young and/or not a good financial planner.

Currently, I have eight or nine open accounts (Visa, MC, AmEx, gas, department stores).  For the past five to ten years my credit score continues to remain stable and relatively high (upper 700's) yet I cannot seem to break the 800 mark.  What I will never do is open more accounts in hopes of upping my score by a few points.  Having twenty-plus open accounts is, IMHO, ridiculous!!

Reply by
luv2bex

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Enter Your ReplyVery well put, Chokaho.  Firstly, let me say that I have NO problem with CreditKarma --other than I liked the "old" look far more this new, more confusing, revamped one.  I sign onto CK once a month or so ... just to "check things out."  CreditKarma is free but, obviously, they are here to make money (selling something).  I understand that and have no problem with it.  I consider every offer CK throws my way with several grains of salt.

More to Chokaho's point ... Over the decades I've had my ups and downs with credit.  I've had numerous and varied credit cards.  Too, I have wondered why having MORE credit cards results in a higher credit score than having FEWER.  I think I have finally realized that Chokaho's post is spot-on.  Credit is a "club."  And The Club can be a very, very dangerous one to join -- especially if you are young and/or not a good financial planner.

Currently, I have eight or nine open accounts (Visa, MC, AmEx, gas, department stores).  For the past five to ten years my credit score continues to remain stable and relatively high (upper 700's) yet I cannot seem to break the 800 mark.  What I will never do is open more accounts in hopes of upping my score by a few points.  Having twenty-plus open accounts is, IMHO, ridiculous!!

Reply by
happyfatmonkey05

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The entire credit system is backwards.  I never had a credit card until 8 months ago, but I also never had a cellphone, utility, landlord, etc. ever report anything negative to my credit report.  The only derogatory marks I had were from medical bills (under $300 total) from a few years back when I was still an irresponsible early twenties year old.  I hadn't had anything negative report in SIX YEARS.  I am still considered a "high credit risk".  It really makes no sense.  If I couldn't pay my bills, those bills would be reporting to the credit bureaus!  But of course the good things people with no credit cards do don't report (like paying your rent on time).  I am a bankruptcy paralegal and most of my clients (who are about to file bankruptcy, mind you) are a "lower" credit risk than I am, with their $20,000 credit card debt versus my $300 medical debt.  None of it makes any sense.

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seira3

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Good articel and replies, I wish I was in a position to pay off all my cards at one time or even monthly in full.  I think Chokaho has a good point, but there are definitely ways to help even the playing field. My score has been consistantly in the 700's for years. Even through 2 extened periods of unemployment. One very good "trick" that is easy to do is never pay interest on your credit card if you are carrying a higher balance that you cannot pay off every month. HOW? Once you have a high credit card balance (as I do on 3 cards) I simply use the other credit cards I have to "move money around" by transferring those balances to no interest rate cards (for 12 to 18 month stints) then I pay on them as much as I can each month. If I get to a point where they are about to start charging interest, I move the remaining back to a card offering no interest rates. The down side is that I am paying transfer fee's. The upside is that the transfer fees are always less than a couple months of interest charges on the card I had the balance on. Because I have such a high score - I get offers from all my credit cards daily.... I simply shread them until it's time for me to "move money". I pay off department store cards monthly, or even on the spot in the stores. I like the added discount you sometimes get for using department store cards (they keep sending you coupons) but those I pay off asap. 

Reply by
dannyhere4u

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some call it paying your dues, call it paying multi billion dollar corps that controlling the population with debt and fear.

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I dispute the comment that it's fine not to have credit at all. Yes, it's fine if you don't ever want to finance a car or get a mortgage. If you DO, however (as do most of us), you need credit. Why? Because apparently paying off $40 in gas a month (with a card with a $10,000 limit) determines if I can pay $1850 a month in mortgage. The simple fact that I've never, ever been late on my $1850 per month rent payment in 15 years has no bearing whatsoever on a mortgage. If I have no credit and no credit history, the bank won't even look at me for a mortgage. Game over, end of story. And that car? Expect ridiculous interest amounts.

The fact that I don't NEED credit because aside from a house, I don't buy anything I can't pay for now and I actually save my money until I can buy that thing I desire or need? Worthless.

My financial advisor says 2 credit cards, with as high a spending limit as you can get (and every 6 months, call and ask for your limit to be raised). Put your gas on one and your groceries on the other. Pay them off every month. Because apparently, if I can pay $500 a month in gas and groceries, I can afford a $1850 per month mortgage payment.

If someone wanted to do something worthwhile, how about we get politicians to force companies to give morgages based on past history of rent and utilities payments, not all this other credit idiocy.

Reply by
Grandmaneedshelp

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Exactly... i took some bad marks with my divorce...late pays, etc...closed all credit cards to take temptation away to spend when I did not have cash... for next 20 years I paid cash for everything, up to and including purchasing and running a business. Payments made to previous owner (previous boss). All inventory, equipment, etc was paid for on cash basis. All bills were paid, all taxes, etc. I eventually bought a building, for cash and fixed it up, while running my business out of it. All vehicles were bought used and paid for in cash. Apparently that does not mean squat! I just bought my mother's house after she died, she had a mortgage on it. I paid half of it, and will have remainder paid to the estate in less than 6 months. I did this by cashing in money market accounts. We have assets in our money markets and IRAs worth over $200,000. We have the house, 2 decent used vehicles (a jeep and a pickup) a newly purchased Harley (paid cash 26,000, as it was a 20 year goal we had set and finally reached it). We pay our insurance and utilities on time, none of which report. I am having a heck of a time getting any sort of credit established now. I do not NEED it necessarily, though I want to have the option as we have semi retired and traveling frequently. I have raised my credit from very poor to one point from Fair, but apparently 20 years of handling my money without using credit was a HUGE mistake! Ah well, live and learn I guess :)

Reply by
mjvx99

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YES!

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Unlike WestTexLawrence, I think this was a pretty decent article. Like he said, the general concept of the article is that "it depends". Well, that's because it really does. Everyone's situation is different, as well as their financial goals. I can't imagine why you'd expect a clear-cut answer for everyone with a topic like this. If you're lucky enough to have a house that's paid for, and government checks to cover everything else, congratulations. But I'm not really sure what you're doing on this site in the first place. For the other 99% of us that rely on a credit score to get us where we need to be, this article does give you some basic info to help you get started.

Thanks Charmaine!

Credit Karma Team
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Thanks for chiming in, sdlatson! Glad you enjoyed the article. We wish there were clear answers for everything too, but there just isn't!

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Reply by
CKCharmaine

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Hi sdlatson, I appreciate your kind words about the article :) I'm happy you found it useful!

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Here's the shocker I learned when my husband passed away. After 22 years of joint credit, all our credit cards were cancelled when Social Security broadcast his death. Therefore I now have only 2 years of credit, the new accounts I had to open on my own when I was left with none. My advice? Be sure to have a few cards of your own.

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Reply by
wjdNJ

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Katie -- this is excellent advice!  Not only for credit cards, but with bank accounts, retirement accounts (IRA's) etc.  Your finances should never, EVERY, be exclusivly in one spouses name!  I'm not suggest that spouses hide money from each other. :)  Sure, have the other spouse as an authorized user on your cards and cosignatory/primary beneficiary on savings, checking, and brokerage accounts.  Otherwise, as you have sadly discovered, the surviving spouse may have to start over from scratch, with no finacial history of their own.

Best of luck with everything, Katie!

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To give a low grade for the smaller number of credit cards is really not very relavent.  I have been in banking over 62 years and one of the biggest issues to deal with is working with people who have a high number of credit cards.  They usually have a high debt load of high interest rate revolving loans making it difficult to help them with their request.  They are counseled to pay down their cards and get rid of all but two or three cards.  Another factor today is the use of Debit Cards which replaces checks and in many cases charges to a Credit Card.  Likewise, I have issues with the 30% rule.  My family owns our bank so that we could make the amount of credit available higher.  I have zero debt, with a 7 digit net worth so that it would seem as if my credit rating would be 850.  Because I have only 3 cards and because we use one of them for banking use which uses up a sizable amount of the available credit which is paid in full each month, my credit rating is being reduced which is a form of credit rating discrimination.  Thus, the question is this, of what value is the FICO rating when underwriting a credit request?

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It depends on the type of credit request. In many lending decisions, a credit score is an important factor, but your overall stability and ability to repay the loan (debt to income ratio) are major factors, among other things. 

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This is all voodoo. I got lost points for having only 4 cards so I recently added another. The new card has a 3% cash back but only a $500 limit so it is not worth using. I usually spend $2,000 or more per month on my other cards and pay in full every month.  So now with the new card I lost points AGAIN because the average age of my accounts went down! I was at 785 and I should not have messed with any of this crap. 

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Hi bloodysurfer,

The drop in your score might be due to the hard inquiry. That would be temporary, and your score should rebound after a few months of using the new card responsibly. 

Reply by
lmflmf1

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I only Have one credit card, visa, and I use it sparingly or for bigger purchases, but that is rare.  I just paid off my entire credit card debt with visa, ($2800.00) and I am at zero now.  I just checked my credit report here on karma and my rating went up from 785 to 792.

i will never carry more than one credit card at a time, it is really the best idea for banks and the worst idea for a consumer, because it allows you to get over your head in credit card debt and it will remain a debt that is never paid off!  So that pair of 300$ shoes you bought with a credit card will end up costing you over 900$.  If you saw the shoes in the shop for $900, you wouldn't buy them....

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So i can pay any card off now.. have since retirement..... i dont care what rating some companie thinks.... cash is still KING

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To me its a game.. You use your credit card instead of your checking and pay that balance off before you pay interest. Never pay interest... You just have to see when that card reports to the Credit Bureau and you have a month to pay it off and you still have credit utilization and still pay your bill in full before any interest is accured..They usually report at the end of every month or very beginning. Change your due date on your CC so it accomadates your credit utilization.. It's that SIMPLE..

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Thanks for posting!

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It just proves how cynical are the lenders who believe that more debt is better for credit. And it also proves how heavy was their collective hand in our great financial crisis. The honest and accurate rule should be: More than two credit cards and your rating goes down for each additional card (with a balance). 

Rewards should be made for property (home) owners who have no mortgage, and the same for automobiles and boats and whatever.

I own three luxury cars with no debt; my first mnortgage totals 20% of what my house is conservatively worth, NOT 80%! These are bad rules which promote lending not saving or credit worthiness. Where is Elizabeth Warren on this? Elizabeth Warren, who with Dodd and Frank, has ensured the demise and ruination of small businesses particularly small financial services businesses? Throw the bums out!!!!!! And I am a Democrat, or perhaps I am a liberal who cannot stomach Democrats or Republicans anymore.

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Thanks for posting. 

Reply by
BiggysMom

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adragonfly, you get my Amen!  Our rule makers need to get their priorities in line with the consumer and truly understand how their decisions affect us.  Even though they claim to be protecting the consumer the rules of Dodd Frank have had many unintended consequences to us all.  The credit score industry is not a fair rating system for some of us.  I've been in mortgage lending and banking compliance for many years and relate to your comments on so many levels!  What I will tell you is that credit administrators and underwriters really do look at all of a person's credit and asset profile to make a credit decision.  Having that conversation and showing debt free assets usually does the job to get credit should you need it.

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