Debunking credit card myths: Does having many credit cards hurt your credit score?

Jan 6, 2021

This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.

Editor’s note: This post has been updated with new information.

We talk about travel credit cards quite a bit here at TPG. Applying for and utilizing these cards strategically can unlock incredible travel experiences like premium class flights or luxurious hotel rooms. However, there are a number of misconceptions out there when it comes to credit cards, so we’re debunking some of these myths in a series of posts.

Want more credit card news and advice? Sign up for TPG’s daily newsletter

Myth: Having many credit cards will hurt your credit score

I have more than a dozen credit cards open. This strikes many of my friends and family members as off-the-wall, and the most common comment I get is, “Aren’t you worried about what all of those cards will do to your credit score?”

Related: Yes, I have 19 credit cards; here’s why

In reality, I’m not worried about what they do to my score. Instead, I am enjoying the boost they have on my score.

For this series, it’s essential to understand the different factors that contribute to your FICO score, the one most frequently used to determine your creditworthiness for any new line of credit:

  • Payment history
  • Amounts owed
  • Length of credit history
  • New credit
  • Types of credit used

However, not all factors are created equal, and these five are weighted based on how important they are to your score:

The factors that make up your FICO score. (Image courtesy of FICO)

When it comes to opening a large number of credit cards, it’s the two most important factors that come into play: payment history and amounts owed.

Related: How credit scores work

Payment history

The single biggest factor in your FICO score is your payment history, which covers any type of credit or installment account linked to your name. While one or two late payments won’t completely ruin your score, it can have a negative impact.

So how does having multiple credit card accounts help this factor? It all comes down to painting a positive picture of your overall credit — and MyFico.com even points out that having multiple accounts with no late payment is a positive.

For example, let’s say you have a single credit card and were late on two or three payments several years ago. Even though you’ve made up ground by paying on time ever since, you’re still 0 for 1 when it comes to accounts showing a late payment. If you add new cards to your wallet and aren’t late on any payments, you now have accounts with a positive track record. This may not move your score from 500 to 700, but in the long run, it’s an undoubtedly positive pattern.

(photo by Westend61/Getty Images)

Amounts owed

My credit score remains high, in large part due to my low credit utilization rate.

The second most important factor in your FICO score is the amounts owed, commonly referred to as your credit utilization rate. This looks at how much of your credit you are actually using and is typically expressed as a percentage. Here’s the calculation:

Total balance on your account(s) / Total limit of accounts = Utilization

Keeping this number low shows issuers that you can effectively manage your credit lines and aren’t at risk of over-extending yourself.

Let’s say that you typically have a $2,000 balance on a credit card, and you currently have a single card with a $10,000 limit. You thus have a utilization rate of 20% ($2,000 / $10,000). However, if you apply for another card and get another $10,000 of credit, you are now spreading that $2,000 balance across double the available credit. Your utilization drops to 10%.

Let’s extend this math out to even more cards with that same $10,000 credit limit and the same $2,000 in monthly spending:

  • Three cards: $2,000 / $30,000 = 6.67%
  • Four cards: $2,000 / $40,000 = 5%
  • Five cards: $2,000 / $50,000 = 4%

My cards have a huge amount of available credit on them, but my utilization rate regularly hovers between 3% and 4%. I don’t spend more on the cards just because I have them. What I am spending is just spread out across a broader credit line, helping my utilization rate and thus improving my credit score.

All that being said, it’s important to note that there are situations where having too many credit cards can impact your credit score. Spending beyond your means (and not paying your balance in full) is a quick way to wreck your score, and adding untrustworthy authorized users can also have a negative impact. Remember too that you should do everything possible to avoid missing payments.

Related: Ten commandments for travel rewards credit cards

Bottom line

There are many myths about credit cards out there, and a common one relates to the perceived negative impact that multiple accounts can have on your credit score. In reality, the opposite is true, as almost two-thirds (65%) of your FICO score is determined by factors that can actually be enhanced with additional accounts. As always, be sure that you aren’t over-extending yourself, as this myth can easily come true given the right (or wrong) environment.

Additional reporting by Madison Blancaflor. 

Featured image by Isabelle Raphael / The Points Guy.

Delta SkyMiles® Platinum American Express Card

Earn 90,000 bonus miles after you spend $3,000 in purchases within the first three months of card membership. Plus, earn a $200 statement credit after your first Delta purchase within the first three months. Offer ends 7/28/21.

With Status Boost™, earn 10,000 Medallion Qualification Miles (MQMs) after you spend $25,000 in purchases on your Card in a calendar year, up to two times per year getting you closer to Medallion Status. Earn 3X Miles on Delta purchases and purchases made directly with hotels, 2X Miles at restaurants and at U.S. supermarkets and earn 1X Mile on all other eligible purchases. Terms Apply.

Apply Now
More Things to Know
  • Limited Time Offer: Earn 90,000 Bonus Miles after spending $3,000 in purchases on your new Card in your first 3 months and a $200 statement credit after you make a Delta purchase with your new Card within your first 3 months. Offer expires 7/28/2021.
  • Limited Time Offer: Plus, get a 0% intro APR on purchases for 12 months from the date of account opening, then a variable 15.74%-24.74%. Offer expires 7/28/2021.
  • Accelerate your path to Medallion Status, with Status Boost®. Plus, in 2021 you can earn even more bonus Medallion® Qualification Miles (MQMs) to help you reach Medallion Status.
  • Earn 3X Miles on Delta purchases and purchases made directly with hotels.
  • Earn 2X Miles at restaurants worldwide, including takeout and delivery and at U.S. supermarkets.
  • Receive a Domestic Main Cabin round-trip companion certificate each year upon renewal of your Card. *Payment of the government imposed taxes and fees of no more than $75 for roundtrip domestic flights (for itineraries with up to four flight segments) is required. Baggage charges and other restrictions apply. See terms and conditions for details.
  • Enjoy your first checked bag free on Delta flights.
  • Fee Credit for Global Entry or TSA Pre✓®.
  • Enjoy an exclusive rate of $39 per person per visit to enter the Delta Sky Club® for you and up to two guests when traveling on a Delta flight.
  • No Foreign Transaction Fees.
  • $250 Annual Fee.
  • Terms Apply.
  • See Rates & Fees
Intro APR on Purchases
0% on purchases for 12 months
Regular APR
15.74%-24.74% Variable
Annual Fee
$250
Balance Transfer Fee
N/A
Recommended Credit
Excellent/Good
Terms and restrictions apply. See rates & fees.

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.