14. Credit Cards: The More, The Merrier
Contrary to what you think, having more credit cards can be remarkably beneficial instead of a burden. On the contrary, having access to just one credit card can adversely affect your credit score due to a factor known as ‘credit utilization ratio.’ Credit utilization ratio measures the amount of credit you are using versus the total credit available to you.
Many financial specialists and planners advise your credit utilization ratio can significantly impact your credit score. Credit card companies suggest that you keep the utilization ratio under 10%, though most cardholders believe maintaining a proportion of 30% -50% will suffice. The total credit available to you for spending goes up when you have more than one credit card.
For instance, if you have three credit cards with limits of $6000, $7000, and $8000, the total credit you can access is $21,000. When you’ve only one card and spend about $2,500-$3000 using your card, then evidently, the unutilized credit that mitigates the impact of expenses is deficient. The nearer you are to your available credit for the spending, the lower or more inferior will be your credit score. Therefore, having multiple credit cards to boost your credit score and improve credit history does not bear hurt but rather help.