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Ask Creditnet: How Many Credit Cards Should I Have?

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Dear Creditnet: What is a good number of credit cards to have in order to optimize my FICO credit scores? Is it possible to have too few or too many credit cards? - Jenny from UT

Answer: While it's certainly possible to have too few or too many credit cards, I wouldn't recommend focusing your attention on how many credit cards you should be carrying around in your wallet. The truth is there's not really an optimal number of credit cards that will maximize your FICO scores.

What's best to focus on is your credit utilization ratio and keeping your ratio under 30 percent (ideally 10 percent or less). Next to payment history, your credit utilization ratio accounts for the largest chunk of your FICO scores and it's directly correlated to not only how many credit cards you have, but also their credit limits and balances. This makes your credit utilization ratio much more important than simply how "many" credit cards you have.

So how do you track your personal credit utilization ratio from month to month? What you'll want to do is run a quick analysis of how much you're spending of your available monthly credit limit from all credit cards combined. You can do this by keeping an up-to-date list of all your credit cards and their current credit limits. When you want to check in on your credit utilization ratio, all you have to do is add up how much of your credit you're using at any given time and divide that number by your total amount of available credit.

For example, let's say you have 3 credit cards with a total combined credit limit of $25,000. If you spend about $2,000 per month on all cards combined, your credit utilization ratio would be 8 percent. That's a great credit utilization ratio, since this number should ideally be somewhere between 0-30% in order to maximize your FICO scores, no matter how many credit cards you have.

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Joshua Heckathorn's picture

Joshua Heckathorn was President of Creditnet, is a credit expert and has been featured on CNNMoney, FOX Business, Yahoo Finance, The Street, and many other national publications during the past ten years.  He received a Bachelor of Science in Management (Finance) from Brigham Young University's Marriott School of Business and earned his MBA from Seattle University.

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