Is Your Credit Score Affected by the Number of Cards You Have?

Yes, but what's more important is how you use them

Your credit score is a three-digit number that lenders and some other businesses use to assess your creditworthiness. Generally speaking, the higher your credit score, the less of a credit risk they will perceive you to be. Having a relatively high credit score can not only help you secure a loan for a big-ticket item, such as a car or a home, but also get you a more favorable interest rate than if you had a lower score.

Key Takeaways

  • The number of credit cards you have can affect your credit score either positively or negatively.
  • But how you use your credit cards has more impact on your score than how many you have.
  • Paying bills on time is the most important factor for both FICO scores and VantageScores, the two leading credit scoring systems.
  • Not using too much of your available credit at any given time is also a key factor in both scoring models.

How Credit Scores Are Weighted

There are two major types of credit scores today: FICO scores and VantageScores, and each of those comes in a variety of versions.

FICO scores, created by Fair Isaac Corporation, are the most widely used. Based on the information in your credit reports, the FICO scoring model looks at five factors, which it weights as follows:

  • Payment history: 35%
  • Amounts owed: 30%
  • Length of credit history: 15%
  • New credit 10%
  • Credit mix: 10%

VantageScores are a more recent competitor, jointly created by the three major credit bureaus, Equifax, Experian, and TransUnion. The most widely used VantageScore, VantageScore 3.0, uses these weightings:

  • Payment history: 40%
  • Credit utilization: 20%
  • Credit balances: 11%
  • Recent credit: 5%
  • Available credit: 3%

How the Number of Credit Cards You Have Can Influence Your Score

For both FICO and VantageScores, the number of credit cards you have can have either positive or negative effects on your score, depending on how you use them.

What FICO refers to as "amounts owed" and VantageScore calls "credit utilization" is a measure of the amount of credit you're using at any given time relative to the total amount of credit you have available to you. As FICO explains, "Having credit accounts and owing money on them does not necessarily mean you are a high-risk borrower with a low FICO Score. However, if you are using a lot of your available credit, this may indicate that you are overextended—and banks can interpret this to mean that you are at a higher risk of defaulting."

In other words, having a bunch of credit cards is fine, as long as you don't max them out. In fact, both the FICO and VantageScore scoring systems favor consumers who keep their credit utilization ratio below 30%, and the lower it is, the better.

For that reason, having several cards can sometimes be better than having just one. As a simplified example, suppose you have two credit cards, each with a credit limit of $5,000, for a combined credit limit of $10,000. If your balance on the two cards totals $2,500, your credit utilization ratio is 25%. However, if you only had one card with a $5,000 credit limit and owed $2,500 on it, your credit utilization ratio would be 50%.

A second way that the number of credit cards might affect your credit score is in FICO's "credit mix" category. That category rewards consumers who have a variety of different credit accounts, such as a mortgage, a car loan, and a credit card. In this case, having at least one credit card in your name can be of benefit. However, it's worth bearing in mind that credit mix only contributes to 10% of your FICO score, making it a relatively minor factor.

How Many Credit Cards Do Most People Have?

According to the most recent data from the credit bureau Experian, Americans have an average of 3.84 credit cards each.

What Is the Best Number of Credit Cards to Have?

There's no simple answer to that question. Many people find that one or two are sufficient, while other people carry wallets stuffed with them. One consideration is how important credit card rewards are to you. For example, you might want to have one credit card that offers cash back on your everyday purchases, like groceries or gasoline, and a different one that offers frequent flier miles on your favorite airline.

Does Applying for a Credit Card Affect Your Credit Score?

When you apply for a credit card, the issuer will request your credit score and credit report in what's known as a "hard inquiry." Hard inquiries will be listed on your credit report and can cause your credit score to drop slightly. As the card issuer Discover explains, "Generally, a single hard inquiry isn't likely to have a big impact on your credit score, but it's best to avoid multiple hard inquiries in a short time frame." That's because lenders may take multiple applications as a sign that you're in danger of taking on too much debt—or that you already have.

How Can You Find Out Your Credit Score?

You can buy your credit score from credit bureaus and scoring agencies or obtain it free of charge from some banks, credit card companies, and websites. Bear in mind that you probably have multiple credit scores, and whichever one you obtain may not be the same score that a lender will look at if you apply for a loan.

What Is a Good Credit Score?

FICO scores and VantageScores both range from 300 to 850. A good FICO score is generally between 670 and 739, while a good VantageScore is 661 to 780.

The Bottom Line

How many credit cards you have can affect your credit score, but what's more important is how you use those cards. In particular, the companies that create credit scores want to see that you pay your bills on time and that you don't use up too much of your available credit.

Article Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.
  1. myFICO. "What's in My FICO Scores?"

  2. VantageScore. "The Complete Guide to Your VantageScore."

  3. Experian. "What Is a Credit Utilization Rate?"

  4. myFICO. "What Does Credit Mix Mean?"

  5. Experian. "What Is the Average Number of Credit Cards per U.S. Consumer?"

  6. Discover. "Does Applying for a Credit Card Hurt Your Credit?"

  7. Experian. "What Is a Good Credit Score?"

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