If you've ever ordered your free credit reports, you may have been surprised by some of the accounts listed there. You may find that credit card you opened to get a 10% discount when you bought a new set of tires. Or the account from the home improvement store taken out the year you remodeled the bathroom. And that first credit card you opened years ago and have barely used since. They may all be there.
The question is, at what point does having all those accounts listed on your credit reports hurt your credit scores? In other words, how many credit cards is too many?
You should be relieved to hear that, in most cases, those accounts aren't hurting your credit scores - and are likely even helping them, provided you aren't carrying a lot of debt. That's because when it comes to your credit scores, most credit scoring models are primarily interested in how you manage your credit cards, rather than the number of accounts listed.
One of the factors affecting your credit scores is the age of your accounts. Here, most scoring models will look at factors such as the age of the oldest account, the average age of your accounts and how recently you've opened a new account. This is one case when older is definitely better. You can earn more points for a long-established credit history, and those accounts you opened many years ago can help, even if you aren't using them anymore.
Beware, though: An account may be deleted from your credit reports after it has been closed or after a period of inactivity. Experian, for example, deletes closed accounts after 10 years. For that reason, you may want to consider using your oldest credit card from time to time to keep it active and open. That's especially true if you don't have a lot of older accounts and losing that reference would significantly shorten the age of your credit history.
Most scoring models compare your available limits on your revolving accounts, such as credit cards, with the balances you carry on them. This is called "utilization." If you are using more than roughly 10 - 25% of your available credit on each of your credit cards - or all of them in total - you may not score as well for this factor as you would if your balances were lower. If you don't carry balances on those cards, then the available credit helps your utilization because it gives you more available credit.
At the same time, however, having a lot of accounts with balances may hurt your credit scores. So if you are juggling a lot of credit card debt, try to find a way to pay down your debt. If you do, you'll save money on interest and you may see your credit scores go up as well.
You can find out how these factors are affecting your credit scores by getting a free credit score from Credit.com. In addition to your score, you'll also see a grade for each of the major factors affecting your scores, including age of credit history and debt.
Again, there is no specific number of cards that is too many. If you focus on paying your cards on time and keeping balances low, you should be fine.